Lithium iron phosphate (LiFePO4 or LFP) is a promising cathode material for large-scale rechargeable lithium ion batteries. It suffers, however, from low ionic and low electronic conductivities. Size reduction to nanoparticles and uniform coating of conductive carbon overcome the conductivity issues. The conventional solid or liquid carbon coating processes drawbacks include the following: carbon excess; non-uniform carbon layer; and undesired carbon type. Furthermore, economical liquid- and solid-based carbon sources, being wastes derived from other industries, may also introduce impurities detrimental to the battery performance. This article presents a new fluidized bed chemical vapour deposition process (FB-CVD) to coat carbon on LFP nanoparticles, with a secondary size representing particles of the Geldart's group B powders, through the pyrolysis of propylene. This gas-phase process is used to overcome challenges in conventional carbon coating processes. Operating conditions including reaction time, gas residence time, reaction temperature, inlet concentration of propylene, and catalytic effect of LiFePO4 powders were investigated to produce C-LiFePO4 (or C-LFP) powders with desired mass and uniformity of coated carbon while avoiding sintering of the material. In addition, a mechanism for gas-phase C-LFP production from LFP is proposed.