Accelerated cycle life testing of lithium-ion batteries is conducted as a means to assess whether a battery will meet its life cycle requirements. This paper presents a study to identify optimal accelerated cycle testing conditions for LiCoO2-graphite cells. A full factorial design of experiment with three stress factors—ambient temperature (10 °C, 25 °C, 45 °C, 60 °C), discharge current rate (C-rate, 0.7C, 1C, 2C), and charge cut-off C-rate (C/5, C/40)—is used to study the effects of these stress factors on battery capacity fade and to obtain the data necessary for decision making. An empirical accelerated degradation model is then developed to capture the characteristics of the two-stage capacity degradation process, along with an accelerated test planning approach.