A detailed model atmosphere analysis of high-resolution and high S/N CCD spectra of IIPeg has yielded for the first time a self-consistent set of fundamental parameters of the primary component: T_eff_=4600K, logg=3.2, [M/H]=-0.4, {xi}_t_=2.0km/s. In addition, 121 new high quality radial velocity measurements allowed us to determine improved orbital parameters, resulting in a new orbital ephemeris of T_conj_=2449582.9268+6.724333E. The position of the primary of II Peg in the HR diagram with the new parameters corresponds to a K2 IV star with mass =~0.8M_{sun}_. The evolved character of the star is confirmed by the C/N ratio, which is reduced significantly relative to the solar value. The unspotted V magnitude of the star of 6.9mag is estimated from the observed variations of the TiO bands and quasi-simultaneous photometry. The blend of LiI 6707{AA} is suspected to vary in equivalent width due to spot modulation. The lithium abundance for the unspotted star, Li/H=1.0+/-0.1, is found to be consistent with other post-main sequence chromospherically active stars. Combining all parameters, the radius R=~3.4R_{sun}_ and the inclination i=~60{deg} of the primary are estimated with the assumption that its rotational axis is perpendicular to the orbital plane. The secondary is probably a M0-M3 V star with a mass of about 0.4M_{sun}_.