The iron precursor of lithium iron phosphate (LiFePO4) is highly prone to oxidation to Fe3+ during the hydrothermal synthesis. The Fe3+ impurities in LiFePO4 restrict the conduction path of Li+ ions in LiFePO4, which negatively affect the cell performance. In this paper, we report that ferrocenecarboxylic acid possessing an extremely stable Fe2+ species and as carbon source has been used successfully to suppress Fe3+ impurities in LiFePO4. The X-ray diffraction results reveal that Li2CO3 first reacts with (NH4)2HPO4 to form Li3PO4 at low temperatures, which above 160°C further reacts with ferrocenecarboxylic acid to give LiFePO4. The infrared spectroscopy, nuclear magnetic resonance, mass spectrometry, and elemental analysis results show that the carbon sources during calcination of LiFePO4 are derived from polymers through sequential [4+2] cycloaddition reactions of cyclopentadiene and 1,3-cyclopentadiene-1-carboxylic acid during decomposition of ferrocenecarboxylic acid. The electron paramagnetic resonance results show that the percentage of Fe3+ in the synthesized LiFePO4 is as low as 0.5 mol%. A plausible reaction mechanism for the hydrothermal synthesis of LiFePO4 is also proposed. The as-synthesized LiFePO4 shows an orthorhombic olivine with a discharge capacity of 158mAhg−1 at a discharge rate of 0.1C. The cell also shows excellent C-rate and cycle-life performances.