The mechanism of lithium intercalation/deintercalation for phase Al0.8Ni3Sn0.2 as anode material used in lithium ion battery was studied carefully based on the first-principle plane wave pseudo-potential method. The calculated results indicated that SnNi Al alloy had high theoretical capacity when used as anode material, however, there was high initial irreversible capacity loss because of the large volume expansion. Therefore the technological parameters during preparing the Sn-Ni-Al anode should be controlled strictly to make the content of Al0.8Ni3Sn0.2 phase as low as possible and to make the anode consist of promising Sn-Ni and AI-Ni phases. For comparison, an experiment based on magnetron sputtering was done. The result showed that the calculation is in good agreement with the experiment. We found that the first-principle investigation method is of far-reaching significance in synthesising new commercial anode materials with high capacity and good cycle performance.