A new approach is developed for cutting conventional micrometer-long entangled carbon nanotubes (CNTs) to short ca. 200 nm long segments with excellent dispersion. CNTs with different lengths are used as anode materials in Li-ion batteries. The reversible capacity of the Li-ion batteries is increased and the irreversible capacity is decreased upon shortening the length of the CNTs. The reason for this is that the insertion/extraction of Li ions is easier into/from short CNTs as compared to long CNTs because of the shortened length and the presence of lateral defects. Moreover, short CNTs have a lower electrical resistance and Warburg prefactor, resulting in better rate performance at high current densities. The present study suggests that short segments of CNTs obtained by cutting long CNTs may possess novel properties that may be useful for a wide variety of applications.