Recovering valuable metals from spent lithium-ion batteries (LIBs) is crucial for environmental protection and resource sustainability. In this study, a novel accelerated selective sulfation roasting process is proposed for the recovery of valuable metals from a spent LiCoO2 (LCO) cathode with the assistance of waste graphite. During the sulfation reaction, the waste graphite in spent LIBs promoted the selective extraction of lithium by accelerating the decomposition of CoSO4. Under the optimal conditions, i.e., a roasting temperature of 600 °C, a ferrous sulfate to LCO mass ratio of 1.4:1, and an added mass ratio of carbon to LCO of 20%, the leaching efficiencies of lithium and cobalt were approximately 99.29% and 0.17%, respectively. The sulfation mechanism of LCO was identified experimentally and with the help of density functional theory (DFT) calculations and followed two pathways. First, crystalline ferrous sulfate with a cubic crystal structure underwent desulfation, releasing the SO2. Next, generated SO2 played a significant role in the gas–solid sulfation reaction with LCO. At an elevated temperature of 600 °C, the presence of carbon accelerated the selective sulfation reaction. DFT calculations further confirmed that carbon addition significantly reduced the energy barrier for the rate-controlling step in cobalt sulfate decomposition and thus accelerating the separation of lithium and cobalt. This study provided fundamental insights into the accelerated selective sulfation reaction, which contributed to the future development of methods for preferentially recovering lithium from the spent LIBs.