This paper studied the electrochemical performance and heat generation characteristics of 18650 LiMn0.6Fe0.4PO4/LiNi0.5Co0.2Mn0.3O2 (LMFP/NCM) composite cathode materials for lithium-ion batteries under different states of health (SOH) (98%, 90% and 82%). The discharge performance, temperature rise and heat generation of these three batteries were investigated at different discharge rates and different temperatures. The electrochemical impedance spectroscopy (EIS), internal resistance and entropy heat coefficient at different depths of discharge (DOD) were analyzed. The results showed the internal resistance and irreversible heat generation increased with the decrease of battery SOH value. The entropy heat coefficient significantly increased at 0.5 DOD, and the maximum total heat generation power was also obtained at 0.5 DOD. The maximum heat generation power of 90% and 82% SOH batteries at 0.5 DOD increased by 175% and 208% than 98% SOH battery when discharging at 2 C, respectively. The battery with 82% SOH had the highest temperature rise (7.5 °C) and total heat generation power (3.12 W), and the ratio of reversible to irreversible heat generation was the lowest (0.152) at −10 °C. It provided a theoretical basis for optimizing the thermal management of LMFP/NCM batteries.