Cobalt (Co) and lithium (Li), rare and valuable elements, are mainly used to prepare lithium cobalt oxide (LiCoO₂) for applications in lithium-ion batteries (LIBs). Developing an effective method to recover Co and Li from the waste LIBs is of great significance. In the present study, Co and Li were extracted from pure LiCoO₂ powders and the extracted cathode materials powders from the waste LIBs after acid dissolution via a mechanochemical reduction process with iron powders. For pure LiCoO₂ powders, the effects of Fe to LiCoO₂ mass ratio, rotation speed, and mechanochemical reduction time were examined. These parameters influenced positively the extraction of Co, while they showed negligible effects on the leaching of Li. The X-ray diffraction (XRD) and scanning electron microscope (SEM) analyses indicated a promoted extraction of Li arising from the reduction of particle sizes, magnification of specific surface area, and change of the crystal structure of particles. For high-efficiency leaching of Co by the mechanochemical reduction process with iron powders, X-ray photoelectron spectroscopy (XPS) analysis indicated the changes in the valence state of Co. The actual cathode materials disassembled from the wasted LIBs pretreated by this novel mechanochemical reduction process were also explored. The results indicated that the leaching ratios of Li, Co, Mn, and Ni could reach 77.15%, 91.25%, 100%, and 99.9%, respectively. This novel mechanochemical process would be of great importance for the recovery of valuable metals from waste LIBs.