For constructing next-generation lithium-ion batteries with advanced performances, pursuit of high-capacity Li-rich cathodes has caused considerable attention. So far, the low discharge specific capacity and serious capacity fading are strangling the development of Fe-based Li-rich materials. To activate the extra-capacity of Fe-based Li-rich cathode materials, a facile molten salt method is exploited using an alkaline mixture of LiOH–LiNO3–Li2O2 in this work. The prepared Li1.09(Fe0.2Ni0.3Mn0.5)0.91O2 material yields high discharge specific capacity and good cycling stability. The discharge specific capacity shows an upward tendency at 0.1 C. After 60 cycles, a high reversible specific capacity of ∼250 mAh g−1 is delivered. The redox of Fe3+/Fe4+ and Mn3+/Mn4+ are gradually activated during cycling. Notably, the redox reaction of Fe2+/Fe3+ can be observed reversibly below 2 V, which is quite different from the material prepared by a traditional co-precipitation method. The stable morphology of fine nanoparticles (100–300 nm) is considered benefiting for the distinctive electrochemical performances of Li1.09(Fe0.2Ni0.3Mn0.5)0.91O2. This study demonstrates that molten salt method is an inexpensive and effective approach to activate the extra capacity of Fe-based Li-rich cathode material for high-performance lithium-ion batteries.