LiFePO4 composites were synthesized by aqueous ball milling and carbon thermal reduction from FePO4·2H2O through a rheological phase using acetic acid as dispersant. The rheological phase assisted method using acetic acid as dispersant improved the homogeneity of mixing raw materials. Li deficiency and solid-solution Mg dopant in the lattice of LiFePO4 was created through controlled off-stoichiometry Li/Fe ratio. Li deficiency, solid-solution Mg doping and uniform carbon layer decreased electron transfer and Li-ion diffusion resistance. The optimal LiFePO4 composite exhibited a high rate capability with 153mA·h·g−1 at 1C and 111mA·h·g−1 at 20C as well as a stable capacity retention with 99% for 100 cycles at 2C and 98% for 200 cycles at 5C. The rheological phase assisted method from FePO4 with acetic acid as dispersant is a promising route for production of high quality LiFePO4 materials at a reasonable cost.