Derating is widely applied to electronic components and products to ensure or extend their operational life for the targeted application. However, there are currently no derating guidelines for Li-ion batteries. This paper presents derating methodology and guidelines for Li-ion batteries using temperature, discharge C-rate, charge C-rate, charge cut-off current, charge cut-off voltage, and state of charge (SOC) stress factors to reduce the rate of capacity loss and extend battery calendar life and cycle life. Experimental battery degradation data from our testing and the literature have been reviewed to demonstrate the role of stress factors in battery degradation and derating for two widely used Li-ion batteries: graphite/LiCoO2 (LCO) and graphite/LiFePO4 (LFP). Derating factors have been computed based on the battery capacity loss to quantitatively evaluate the derating effects of the stress factors and identify the significant factors for battery derating.