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Layered LiFeSO4OH has recently attracted interest as a sustainable cathode material for rechargeable lithium batteries that offers favorable synthesis and processing routes. Here, the defect chemistry, lithium-ion transport pathways, and cell voltages of layered LiFeSO4OH are investigated by atomistic modeling and density functional theory (DFT) methods and compared with the tavorite polymorph. The results indicate that the layered phase exhibits two-dimensional (2D) lithium-ion diffusion with low activation energies of ∼0.2 eV for long-range transport within the bc-plane, which is important for good rate capability. The tavorite phase also shows 2D lithium-ion diffusion but with higher activation energies of ∼0.7 eV. Using DFT+U techniques the experimental voltage and structural parameters are accurately reproduced for the tavorite polymorph. For the layered structure, similar accuracy in both cell voltage and structure can only be obtained if a van der Waals functional is included in the DFT methodology to account for the interlayer binding.