Since graphene was reported by Geim and Novoselov et al.in 2004, two-dimensional (2D) layered materials (sheets) have rapidly risen to be one of the hottest topics in material science due to their attractive properties for various applications. Here we prepared mono/bi-layer iron phosphate two-dimensional (2D) materials with 0.74 nm/1.52 nm thickness by means of a simple chemically induced precipitation method and post-processing. The mechanism of growth of the atomically thin 2D-sheet crystals was investigated by experimental measurements and theoretical calculations. The crystalline 2D sheets were easily oxidized to the amorphous phase in air, and LiFePO₄ nano-crystals self-nucleated from amorphous 2D sheets in the charge/discharge process. The 2D sheets show excellent performance properties as cathode materials: high initial discharge capacity of 185 mAh g^-1 at 0.1 C, stable cycling (98% capacity retention over 400 cycles), and high rate capability (107 mAh g^-1 at 20 C) for Li-ion storage. A model for self-nucleation of the LiFePO₄nano-crystals involving double-center diffusion is discussed.