Recycling of spent lithium-ion batteries (LIBs) has become urgently imperative to address global environmental issues and achieve sustainable development of new energy industries. Prioritizing lithium and aluminum leaching is an ideal path for recovering lithium efficiently from spent LFP and preparing high-purity battery-grade FePO4. Here, a novel ferric ions-assisted air oxidation method was proposed for the simultaneous leaching of Li and Al. Fe3+ was ingeniously introduced playing two roles: acting as a catalyst for air oxidation and leaching aluminum. 98.8% Li and 95.2% Al are selectively leached under optimal conditions. The thermodynamic analysis indicated that the displacement reaction between Al and Fe3+ dominates the leaching of Al. Furthermore, Cl− can promote the leaching of Al by forming a stable complex [AlCl4]− with Al3+. The reaction course and mechanism were clarified by various characterizations, which indicate that the successful selective leaching of lithium does not destroy the original structure of LFP and the presence of carbon coatings. A cycling process was proposed for enriching the Li+ concentration and reusing Fe3+, and then Li2CO3 with a purity of 99wt.% was successfully prepared. This method demonstrates excellent economic efficiency and environmental friendliness, thus providing a sustainable and low-carbon recycling route for the spent LFP industry.