In this study, a novel method that allows selective extraction of lithium and production of battery grade Li2CO3 is introduced, which includes nitration, selective roasting, water leaching and Li2CO3 preparation. By this method, metallic components in Li-ion battery waste are firstly transformed into corresponding nitrates, and then decomposed into insoluble oxides during roasting except for lithium nitrate, which is ready to be extracted by water leaching. Under the optimum conditions of nitration (70 °C, 5 h, acid-to-scrap ratio of 30 mmol/g), selective roasting (250 °C, 1 h) and 4-stage cross-current water leaching (25 °C, liquid-to-solid ratio of 2:1), lithium extraction up to 93% is achieved, whereas extraction of other metals like cobalt, nickel, copper etc. are <0.1%. The obtained lithium-rich solution (34.1 g/L lithium) is then subjected to a carbonation step at 95 °C for 30 min to form the desired Li2CO3. The purity of Li2CO3 produced is up to 99.95%, a level above the minimum standards required for battery grade Li2CO3. Application of this new process could significantly improve lithium recovery from waste Li-ion batteries, as the overall recovery of 90% for lithium achieved is much higher than previously reported lithium recovery of 60–80% from waste Li-ion batteries.