Improper disposal of spent lithium-ion batteries (LIBs) leads to severe resource waste and environmental pollution; recycling of LIBs still faces the challenge of low efficiency, high energy consumption, and large carbon footprints. In this study, a new method based on chemical looping technology for high-efficiency recycling of LiCoO2 was proposed, in which LiCoO2 particles were used as an oxygen carrier, taking advantage of the complementary matching property between hydrogen concentration and temperature during the reaction process, which is the featured characteristic of chemical looping technology; LiCoO2 could be orderly converted to Li2O, CoO, and Co. The reduction properties of LiCoO2 oxygen carriers in the process were investigated at various temperatures and times, and the reduction mechanisms were elaborated on by density functional theory (DFT) calculations. Results show that the conversion efficiency of LiCoO2 was close to 100%, and the main products were Li2O, CoO, and Co, which were the desired materials. The selectivity of Li2O and Co/CoO was 54.37% and 45.63%, and the recovery of Li and Co was 55.81% and 57.05%, respectively. Thermodynamic analysis revealed that the reduction of LiCoO2 involved four main stages in the H-2 atmosphere, and stage III with the largest weight loss (10.57 wt %) was the decisive stage for the LiCoO2 reduction. DFT calculations show that H-2 molecules preferred to adsorb on the surface of the O atoms in LiCoO2 crystals with the lowest E-total (-5.19 eV), and the positive value of Delta E-ads (0.67 eV) indicates that the adsorption required externa energy input to facilitate the reaction.