Metal phosphorus trichalcogenide (MPX3) materials have aroused substantial curiosity in the evolution of electrochemical storage devices due to their environment-friendliness and advantageous X-P synergic effects. The interesting intercalation properties generated due to the presence of wide van der Waals gaps along with high theoretical specific capacity pose MPX3 as a potential host electrode in lithium batteries. Herein, we synthesized two-dimensional iron thio-phosphate (FePS3) nanoflakes via a salt-template synthesis method, using low-temperature time synthesis conditions in single step. The electrochemical application of FePS3 has been explored through the construction of a high-capacity lithium primary battery (LPB) coin cell with FePS3 nanoflakes as the cathode. The galvanostatic discharge studies on the assembled LPB exhibit a high specific capacity of ~1791 mAh g−1 and high energy density of ~2500 Wh Kg−1 along with a power density of ~5226 W Kg−1, some of the highest reported values, indicating FePS3’s potential in low-cost primary batteries. A mechanistic insight into the observed three-staged discharge mechanism of the FePS3-based primary cell resulting in the high capacity is provided, and the findings are supported via post-mortem analyses at the electrode scale, using both electrochemical- as well as photoelectron spectroscopy-based studies.