The rapid market expansion of Li-ion batteries (LIBs) leads to concerns over the appropriate disposal of hazardous battery waste and the sustainability in the supply of critical materials for LIB production. Technologies and strategies to extend the life of LIBs and reuse the materials have long been sought. Direct recycling is a more effective recycling approach than existing ones with respect to cost, energy consumption, and emissions. This approach has become increasingly more feasible due to digitalization and the adoption of the Internet-of-Things (IoT). To address the question of how IoT could enhance direct recycling of LIBs, we first highlight the importance of direct recycling in tackling the challenges in the supply chain of LIB and discuss the characteristics and application of IoT technologies, which could enhance direct recycling. Finally, we share our perspective on a paradigm where IoT could be integrated into the direct recycling process of LIBs to enhance the efficiency, intelligence, and effectiveness of the recycling process.