With the development and popularization of electric vehicles, it is urgent and necessary to develop effective management and diagnosis technology for battery systems. In this work, we design a parallel battery model, according to equivalent circuits of parallel voltage and branch current, to study effects of imbalanced currents on parallel large-format LiFePO4/graphite battery systems. Taking a 60 Ah LiFePO4/graphite battery system manufactured by ATL (Amperex Technology Limited, China) as an example, causes of imbalanced currents in the parallel connection are analyzed using our model, and the associated effect mechanisms on long-term stability of each single battery are examined. Theoretical and experimental results show that continuously increasing imbalanced currents during cycling are mainly responsible for the capacity fade of LiFePO4/graphite parallel batteries. It is thus a good way to avoid fast performance fade of parallel battery systems by suppressing variations of branch currents.