Inorganic flame retardants (ATH and AlOOH) and an organic retardant (TPP) are embedded in cathodes and studied based on their fire retardancy for the safety of Li-ion battery. To prevent possible chemical reaction in the cathode, the flame retardants are microencapsulated (en-ATH, en-AlOOH, and en-TPP) using chemically stable poly(urea-formaldehyde) for comparison. The organic TPP is hydrophobic and its addition causes severe agglomeration of cathode materials, while the addition of en-TPP improves the dispersion. Both ATH and AlOOH own hydroxyl groups, and microencapsulation reduces their hydrogen bonding to improve their dispersion in the slurry. In the fire extinguishing test, a new method that simultaneously studies self-extinguishing time and temperature variation during the combustion of electrolytes is employed. Among all the retardants, ATH exhibits the best retardancy of 68%, with its retardancy remaining high at 62%, even when microencapsulated. Organic TPP shows a retardancy of 60% that decreased to 30% upon microencapsulation. The retardancies of AlOOH and en-AlOOH are intermediate between ATH and TPP and between en-ATH and en-TPP, respectively. The direct use of flame retardants results in the deterioration of the cell performance, which negative effect on the electro-chemistry can be diminished efficiently by the use of microencapsulated retardants.