Nanocomposite SiOx particles have been produced by a single step plasma spray physical vapor deposition (PS-PVD) through rapid condensation of SiO vapors and the subsequent disproportionation reaction. Core-shell nanoparticles, in which 15 nm crystalline Si is embedded within the amorphous SiOx matrix, form under typical PS-PVD conditions, while 10 nm amorphous particles are formed when processed with an increased degree of non-equilibrium effect. Addition of CH4 promotes reduction in the oxygen content x of SiOx, and thereby increases the Si volume in a nanocomposite particle. As a result, core-shell nanoparticles with x = 0.46 as anode exhibit increased initial efficiency and the capacity of lithium ion batteries while maintaining cyclability. Furthermore, it is revealed that the disproportionation reaction of SiO is promoted in nanosized particles attaining increased Si diffusivity by two orders of magnitude compared to that in bulk, which facilitates instantaneous composite nanoparticle formation during PS-PVD.