The rapidly growing demand for lithium iron phosphate (LiFePO₄) as the cathode material of lithium-ion batteries (LIBs) has aggravated the scarcity of phosphorus (P) reserves on Earth. This study introduces an environmentally friendly and economical method of P recovery from municipal wastewater, providing the P source for LiFePO₄ cathodes. The novel approach utilizes the sludge of Fe-coagulant-based chemical P removal (CPR) in wastewater treatment. After a sintering treatment with acid washing, the CPR sludge, enriched with P and Fe, transforms into purified P–Fe oxides (Fe_2.1P_1.0O_5.6). These oxides can substitute up to 35% of the FePO₄ reagent as precursor, producing a carbon-coated LiFePO₄ (LiFePO₄/C) cathode with a specific discharge capacity of 114.9 mA·h·g⁻¹ at current density of 17 mA·g⁻¹), and cycle stability of 99.2% after 100 cycles. The enhanced cycle performance of the as-prepared LiFePO₄/C cathode may be attributed to the incorporations of impurities (such as Ca²⁺ and Na⁺) from sludge, with improved stability of crystal structure. Unlike conventional P-fertilizers, this P recovery technology converts 100% of P in CPR sludge into the production of value-added LiFePO₄/C cathodes. The recovered P from municipal wastewater can meet up to 35% of the P demand in the Chinese LIBs industry, offering a cost-effective solution for addressing the pressing challenges of P scarcity.