The recycling of spent lithium-ion batteries is an effective approach to alleviating environmental concerns and promoting resource conservation. LiFePO batteries have been widely used in electric vehicles and energy storage stations. Currently, lithium loss, resulting in formation of Fe(III) phase, is mainly responsible for the capacity fade of LiFePO cathode. Another factor is poor electrical conductivity that limits its rate capability. Here, we report the use of a multifunctional organic lithium salt (3,4-dihydroxybenzonitrile dilithium) to restore spent LiFePO cathode by direct regeneration. The degraded LiFePO particles are well coupled with the functional groups of the organic lithium salt, so that lithium fills vacancies and cyano groups create a reductive atmosphere to inhibit Fe(III) phase. At the same time, pyrolysis of the salt produces an amorphous conductive carbon layer that coats the LiFePO particles, which improves Li-ion and electron transfer kinetics. The restored LiFePO cathode shows good cycling stability and rate performance (a high capacity retention of 88% after 400 cycles at 5 C). This lithium salt can also be used to recover degraded transition metal oxide-based cathodes. A techno-economic analysis suggests that this strategy has higher environmental and economic benefits, compared with the traditional recycling methods.