Lithium iron phosphate batteries (LFP), widely used as power sources, are forecasted to reach the terawatt-hour scale, inevitably leading to battery waste and expediating the urgency for effective recycling processes for LFP. The modern recycling methodologies based on material recovery face significant economic, environmental, and energy consumption challenges. This research attempts to resolve these challenges by providing direct cathode regeneration based on the principles of an external short-circuit to replenish lithium lost in the spent cathode with lithiated materials (LiC6, Li metal). Given that most active lithium loss in the cathode is caused by the growth of the solid electrolyte interphase rather than structural damage, restoring the lost lithium can revitalize a spent cathode battery’s electrochemical performance to a near-original state. The lithium loss in LFP cathodes ranging from 20% to 80% was renewed by supplementing lithium. Relithiation of 10Ah commercial LFP spent cathode showed revitalized electrochemical performance. Compared to the modern recycling methods, direct cathode regeneration improves the economic benefits of recycling by 33%, decreases energy consumption by 48%, and reduces carbon emissions by 62%. Direct cathode regeneration provides a scaffold for the next generation of recycling methods to improve recycling efficiency while reducing their environmental footprint.