Recent experiments showed beneficial influence of vanadium doping on the electrochemical performance of lithium iron phosphate (LiFePO4) cathode materials. First-principles calculations have been performed to investigate the stability, electronic structure and lithium diffusivity of vanadium-doped LiFePO4 and to elucidate the origin of such improvement. It is found that vanadium prefers occupying Fe sites and leads to additional density of states within the intrinsic bandgap. By the nudged elastic band method, we show that the barrier of Li ions diffusion along the one dimensional channel in both LiFePO4 and FePO4 phases can be effectively reduced by vanadium doping. Structural analysis shows the lower diffusion barrier ties closely to a volumetric expansion of the diffusion channel.