The local structure and magnetic properties of a series of carbon-coated LiFePO4 particles prepared under different conditions are analyzed with X-ray diffractometry (XRD), FTIR and Superconducting Quantum Interference Device (SQUID) magnetometry for comparison. While nano-sized ferromagnetic particles (γ-Fe2O3 clusters) are detected by magnetic measurements in samples grown from iron(II) oxalate, such ferromagnetic clusters do not exist in the optimized samples grown from FePO4(H2O)2. FTIR analyses show that carbon does not penetrate significantly inside the LiFePO4 particles despite the fact that it has been very efficient in reduction of Fe3+ to prevent γ-Fe2O3 clustering, thus pointing to a gas-phase reduction process. The impact of the carbon coating on the electrochemical properties is also reported. No iron dissolution was observed after 200 charge–discharge cycles at 60°C for cells containing lithium foil, lithium titanate or graphite negative electrodes.