Under the background of carbon peaking and carbon neutrality in China, anaerobic digestion of sludge to produce methane was an important way to recover biomass energy. But plenty of as-generated biogas slurry (BS) with high P concentration was valuable and difficult to dispose. Here, this work proposed a low-carbon emitting Fe-cycle strategy to recover battery-grade FePO4 from BS. At pH=1.0, the P-leaching rate of Fe-sludge (42.93 ± 1.49 mg g−1) generated by polymerized ferrous sulfate (an inorganic polymer coagulant) addition into BS was 93.46 ± 3.56% and high-purity FePO4 (99.0%) could further be obtained by Fe3+ supplement and pH adjustment (pH=2.0). The contents of all elements in recovered FePO4 product fully complied with the battery grade of national industry standard of China (HG/T 4701-2021). After battery-grade FePO4 precipitate separation, recovery solution (RS) with remaining Fe3+ was reutilized to remove 88.05 ± 1.77% of P when mixed with BS wit RS/BS ratio of 2:1, thus achieving a Fe cycle utilization. Meanwhile, the recovery cost of 5.42 $/kg P and CO2 emissions of 80.83 kg/kg P were lower than those of current FePO4 industrial production (14.60 $/kg P and 110.60 kg/kg P). Finally, the LiFePO4/C cathode material based on recovered FePO4 from BS exhibited stable discharge specific capacity of 84.6–100.2 mAh/g during 100 charge–discharge cycles. In general, this study successfully manifested the feasibility of novel Fe-cycle battery-grade FePO4 recovery strategy from wastewater, paving a viable low-carbon emitting pathway for future Li-battery manufacture industry.