A novel hydrothermal synthesis was developed to prepare carbon-coated lithium vanadium phosphate (Li3V2(PO4)3) powders to be used as cathode material for Li-ion batteries. The structural, morphological and electrochemical properties were investigated by means of X-ray powder diffraction (XRD), thermogravimetry (TG), scanning electron microscopy (SEM), transmission electron microscopy (TEM) and constant current charge–discharge cycling. This material exhibits high initial discharge capacity of 178, 173 and 172mAhg−1 at 0.1, 0.2 and 0.5 C between 3.0 and 4.8V, respectively. Moreover, it displays good fast rate performance, which discharge capacities of 136, 132 and 127mAhg−1 can be delivered after 100 cycles between 3.0 and 4.8V versus Li at a different rate of 1, 2 and 5 C, respectively. For comparison, the electrochemical properties of carbon-coated lithium vanadium phosphate prepared by traditional solid-state reaction (SSR) method are also studied.