Abstract There is a pressing need to recover asymmetric-capacitance nickel-metal hydride power batteries (AC-NiMH) owing to their large number of applications. However, recycling of these batteries is challenging because of its complexity, low extraction efficiency, and high cost. Herein, we demonstrate a sustainable, green, and effective recovery process for rare earth metals while directly preparing LiNi 0.6 Co 0.2 Mn 0.2 O 2 cathodes from cathode and anode AC-NiMH spent materials. Based on the different solubility of metal-salt, a stepwise leaching was proposed. We investigate the effects of a range of parameters (i.e., initial acid concentration, reaction temperature, and time) on the leaching process. Over 99% of rare earth, Co, Ni, and Mn are leached out during the recovery process, with the leaching kinetics following a shrinking core model with inter-diffusion as the rate-determining step. Rare earths are recovered in the form of high-purity sulfuric acid complex salts, while Ni, Co, and Mn are used to synthetize LiNi 0.6 Co 0.2 Mn 0.2 O 2 cathodes with good electrochemical properties. This research demonstrates a sustainable process for the recycling of power sources.