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The design of an optimized thermal management system for Li-ion batteries has challenges because of their stringent operating temperature limit and thermal runaway, which may lead to an explosion. In this paper, an optimized cooling system is proposed for kW scale Li-ion battery stack. A comparative study of the existing cooling systems; air cooling and liquid cooling respectively, has been carried out on three cell stack 70Ah LiFePO4 battery at a high discharging rate of 2C. It has been found that the liquid cooling is more efficient than air cooling as the peak temperature of the battery stack gets reduced by 30.62% using air cooling whereas using the liquid cooling method it gets reduced by 38.40%. The performance of the liquid cooling system can further be improved if the contact area between the coolant and battery stack is increased. Therefore, in this work, an immersion-based liquid cooling system has been designed to ensure the maximum heat dissipation. The battery stack having a peak temperature of 49.76 °C at 2C discharging rate is reduced by 44.87% to 27.43 °C after using the immersion-based cooling technique. The proposed thermal management scheme is generalized and thus can be very useful for scalable Li-ion battery storage applications also.