Metal sulfides have received growing attention as electrode materials for lithium ion batteries. However, large volume changes often cause a sharp decrease in capacity and thus leads to poor cycling performance. Here, we developed a facile hydrothermal process for preparation of FeS sub(2) nanocrystals (NCs) with diameter ranging from 10 to 35 nm and tested them as anode materials for lithium-ion batteries. In comparison with FeS sub(2) micro-particles, these FeS sub(2) NCs show higher capacity, a more stable discharge plateau and better cycling performance. Moreover, we studied the magnetic properties of these FeS sub(2) NCs in detail for the first time. The two as-prepared FeS sub(2) NCs have completely different magnetic properties. FeS sub(2) NCs prepared from Fe(acac) sub(3) show antiferromagnetism at room temperature and exhibit weak paramagnetism at low temperature. However, when nano-Fe sub(3)O sub(4) was used as the iron source, the synthesized products show ferromagnetic and paramagnetic behaviors which is due to the formation of a trace amount of pyrrhotite in the main phase. Our results indicate that detection of the trace amount of impurity in the main FeS sub(2) phase by traditional methods such as XRD, EDS, XPS and even room-temperature Mossbauer spectroscopy is ineffective, and that magnetic measurements alone are reliable.