LiFePO4/C composite materials have been synthesized from a low cost Fe2O3 precursor by a hydrothermal method to make LiFePO4(OH) in a first step followed by a fast calcination and carbon coating. This method combines the advantages of both hydrothermal and solid state synthetic methods. The as-prepared LiFePO4/C provides enhanced discharge capacity and cycling stability compared to LiFePO4 synthesized using a solid state method with the same precursors. Thus, the method to be described herein is a promising option in the search to reduce the cost of large-scale synthesis of LiFePO4/C for use in lithium-ion batteries, while maintaining adequate electrochemical performance.