Hydrometallurgy remains a major challenge to simplify its complex separation and precipitation processes for spent lithium‐ion batteries (LIBs). Herein, we propose a Fischer‐lactonisation‐driven mechanism for the cascade reaction of leaching and chelation of spent LIBs. Citric acid undergoes a two‐step dissociation of the carboxylic acid (‐COOH) and complexes with the leached metal ion, while the residual ‐COOH is attacked by H protons to form a protonated carboxyl ion (‐COO^‐). Subsequently, the lone pair of electrons in the hydroxyl of the same molecule attack the carbon atom in ‐COO^‐ to facilitate ester bonding, leading to the formation of a lactonized gel. The leaching rates of Li, Ni, Co and Mn are 99.3, 99.1, 99.5 and 99.2%, respectively. The regenerated monocrystalline LiNi0.5Co0.2Mn0.3O2 (NCM523) has a uniform particle size distribution and complete lamellar structure, with a capacity retention rate of 70.6% after 250 cycles at 0.5 C. The mechanism achieves a one‐step chelation reaction, and the energy consumption and carbon emissions are only 26% and 44%, respectively, of that of the conventional hydrometallurgical. The strategy achieves a double breakthrough in simplifying the process and improving environmental friendliness, offering a sustainable approach to the re‐utilization of spent LIBs.