Fe-based double perovskites exhibit significant potential as cathode materials for solid oxide fuel cells (SOFCs) owing to their affordability, moderate thermal expansion, and impressive stability. Nevertheless, their practical utility has been constrained by their comparatively lower oxygen reduction reaction (ORR) catalytic activity. In this study, for the first time, lithium (Li) was employed as a dopant to improve the ORR activity of the Fe-based double perovskite PrBaFe2O5+δ (PBFO). The results indicated that the ratios of Fe3+/Fe2+ and Oads/Olat were effectively tuned by incorporating Li at Ba-sites of PBFO. Consequently, the adsorption and dissociation of oxygen, along with the charge transfer processes were regulated significantly, resulting in an increase in ORR kinetics and improved CO2 resistance. At 800 °C, PrBa0.9Li0.1Fe2O5+δ (PBLFO) demonstrated an Rp of 0.072 Ω cm², which was decreased by 43.3% compared to PBFO. Simultaneously, the maximum power density of PBLFO-based full cell was improved by 23.3%, reaching 670 mW cm−2. These findings suggest that Li-doping holds great potential for improving the performance of Fe-based SOFC cathodes, thereby contributing to the advancement of clean and sustainable energy technologies.