Inadequate and inappropriate recycling technologies for e-waste have led to many environmental and economic problems, including the loss of strategic metals from spent cathode materials such as LiCoO₂, high energy consumption, and the generation of hazardous materials. In this study, we proposed a novel and environmentally benign process for leaching, separating, and recovering strategic metals such as lithium (Li) and cobalt (Co) from spent lithium-ion batteries (LIBs) over hydrothermal reaction conditions assisted by dilute formic acid (DFA). The effects of experimental parameters such as (H₂O: HCOOH) ratio (v/v), temperature, reaction time, and liquid-solid ratio on the extraction performance of Li and Co have been carefully evaluated. The findings revealed that DFA successfully leaches Li and Co from the spent LiCoO₂ cathode materials of Li-ion batteries without any assistance from reducing reagents. The solid materials were characterized by XRD, XPS, FT-IR, and SEM-EDS analyses. However, the leaching liquor was analyzed by ICP-OES. At 220°C, a reaction time of 25 min, an H₂O: HCOOH ratio (v/v,) of 78:12, and a liquid-solid ratio of 25 mL/g, 99.89% for Li and 99.56% for Co were effectively leached from the spent LiCoO₂ powder. Further, the activation energy for Li was 24.15KJ/mol, while that for Co was 31KJ/mol. Finally, Co₂O₃ nanoparticles and Li₂CO₃ were successfully recovered from the leaching liquor by the precipitation and calcination methods after the separation steps. Therefore, this process could be an alternative method due to its low energy consumption, ease of use, and being environmentally friendly.