An integrated model of thermodynamics and first-principles calculation was developed. The Gibbs free energy of the nanograin boundaries in the nanocrystalline α-Li2C2 system was calculated as a function of temperature and grain size, and the electronic structures at the surface and in the interior of the nanograin were analyzed. The modeling results show that when the grain size is smaller than a critical value, the nanocrystalline α-Li2C2 has higher thermodynamic stability than the conventional polycrystalline counterpart. The analysis of the electronic structure indicates that the nanocrystalline α-Li2C2 can have good performance in the lithiation/delithiation processes. The structure of the delithiated phase and the optimal theoretical capacity were further predicted by the model. On the other hand, the conventional polycrystalline and nanocrystalline α-Li2C2 were prepared and the electrochemical tests were performed. As compared with the conventional polycrystalline α-Li2C2, the nanocrystalline α-Li2C2 has a larger discharge capacity and much higher cycling stability as the cathode material, which confirms the model predictions. The results of model prediction and experimental identification propose that the nanocrystalline α-Li2C2 is a promising cathode material for lithium-ion batteries.