The mechanism of enhancing the capacity of the LiFePO 4 cathodes in lithium ion batteries by the addition of a small amount of vanadium, which locate on the lithium site and induce lithium vacancies in the crystal structure, is reported in this article. As a result, the capacity increases from 138 mAh/g found for pristine LiFePO 4 to 155 mAh/g for the V-added compound, and the conductivity increases from 4.75 × 10 −4 S/cm for the LiFePO 4 without V addition to 1.9 × 10 −2 S/cm for the V-added compound. A possible model to facilitate the enhancement of conductivity and capacity is described with evidence supported by X-ray powder diffraction, X-ray absorption spectroscopy, and neutron powder diffraction data.