We have studied LiFePO4/C nanocomposites prepared by sol-gel method using lauric acid as a surfactant and calcined at different temperatures between 600 and 900 °C. In addition to the major LiFePO4 phase, all the samples show a varying amount of in situ Fe2P impurity phase characterized by x-ray diffraction, magnetic measurements, and Mössbauer spectroscopy. The amount of Fe2P impurity phase increases with increasing calcination temperature. Of all the samples studied, the LiFePO4/C sample calcined at 700 °C which contains ∼15 wt% Fe2P shows the least charge transfer resistance and a better electrochemical performance with a discharge capacity of 136 mA h g−1 at a rate of 1 C, 121 mA h g−1 at 10 C (∼70 % of the theoretical capacity of LiFePO4), and excellent cycleability. Although further increase in the amount of Fe2P reduces the overall capacity, frequency-dependent Warburg impedance analyses show that all samples calcined at temperatures ≥700 °C have an order of magnitude higher Li+ diffusion coefficient (∼1.3 × 10−13 cm2 s−1) compared to the one calcined at 600 °C, as well as the values reported in literature. This work suggests that controlling the reduction environment and the temperature during the synthesis process can be used to optimize the amount of conducting Fe2P for obtaining the best capacity for the high power batteries.