Lithium-ion (Li-ion) batteries are complex energy storage devices with their performance behavior highly dependent on the operating conditions (i.e., temperature, load current, and state-of-charge (SOC)). Thus, in order to evaluate their techno-economic viability for a certain application, detailed information about Li-ion battery performance behavior becomes necessary. This paper proposes a comprehensive seven-step methodology for laboratory characterization of Li-ion batteries, in which the battery’s performance parameters (i.e., capacity, open-circuit voltage (OCV), and impedance) are determined and their dependence on the operating conditions are obtained. Furthermore, this paper proposes a novel hybrid procedure for parameterizing the batteries’ equivalent electrical circuit (EEC), which is used to emulate the batteries’ dynamic behavior. Based on this novel parameterization procedure, the performance model of the studied Li-ion battery is developed and its accuracy is successfully verified (maximum error lower than 5% and a mean error below 8.5 mV) for various load profiles (including a real application profile), thus validating the proposed seven-step characterization methodology.