Modeling and state of charge (SOC) estimation of Lithium cells are crucial techniques of the lithium battery management system. The modeling is extremely complicated as the operating status of lithium battery is affected by temperature, current, cycle number, discharge depth and other factors. This paper studies the modeling of lithium iron phosphate battery based on the Thevenin’s equivalent circuit and a method to identify the open circuit voltage, resistance and capacitance in the model is proposed. To improve the accuracy of the lithium battery model, a capacity estimation algorithm considering the capacity loss during the battery’s life cycle. In addition, this paper solves the SOC estimation issue of the lithium battery caused by the uncertain noise using the extended Kalman filtering (EKF) algorithm. A simulation model of actual lithium batteries is designed in Matlab/Simulink and the simulation results verify the accuracy of the model under different operating modes.