The recycling of lithium iron phosphate (LFP) batteries presents both challenges and opportunities in the quest for sustainable energy solutions. This study focuses on the development and evaluation of a direct recycling method for spent LFP materials, emphasizing the removal of impurities and regeneration of cathode materials. Traditional recycling methods, including pyrometallurgical and hydrometallurgical processes, are hindered by high costs, significant energy consumption, and environmental impacts due to the use of toxic chemicals and high-temperature operations. In contrast, our proposed direct recycling route—comprising hydrothermal treatment, calcination, and sintering—offers a simpler, more economical, and environmentally friendly approach. This method efficiently removes impurities and tunes carbon content to optimize the performance of regenerated LFP materials. Through comparative analysis, we demonstrate the effectiveness of our approach in handling diverse feedstocks, including spent batteries and battery scraps, highlighting the potential for scalability. The electrochemical performance of regenerated materials, evaluated through various testing protocols, shows significant improvements, although challenges remain in addressing degradation associated with lithium/proton exchange during relithiation.Overall, this work underscores the viability of direct recycling as a paradigm shift toward profitable and green recycling of LFP batteries. The findings suggest that with further optimization, particularly in the annealing process to enhance particle stability and performance, direct recycling can significantly contribute to the circular economy of battery materials, reducing greenhouse gas emissions and lowering operational costs compared to conventional methods. Future research should focus on refining these processes to fully realize their industrial potential and address the remaining technical challenges.