Degradation behavior is the main technical problem in the field of commercial application of lithium-ion batteries. According to the characteristics of voltage, discharge capacity and inner resistance during the charge/discharge process of commercial lithium-ion batteries of mobile telephone, degradation analysis and related mechanisms are put forward and discussed in the paper. The impedance spectra of prismatic commercial lithium-ion batteries are measured at various state of charge after different charge/discharge cycles. The measured impedance spectra are discussed with a proposed equivalent circuit. Results indicated that the structure change of electrode materials or swell and shrink of crystal lattice, decompose of electrolyte, dissolution of active materials and solid electrolyte interphase film formation are the main reasons leading to the capacity degradation.