The major hurdle of room temperature sodium-ion batteries (NIBs) for large-scale energy storage applications lies in developing new electrode materials with higher energy/power densities and improved durability. This work presents a novel Na-P3/Li2MnO3 layered composite cathode with an alternating heteroepitaxial nanostructure fabricated by an in-situ composition modulation route. XRD structural refinement, synchrotron XAS and aberration-corrected HAADF-/ABF-STEM were employed to understand the structure evolution accompanying Li substitution. It is revealed that the in-situ formation of Li2MnO3 (Li-O’3) changes the crystallographic and chemical features of the neighboring Na-P3 layered matrix significantly and leads to the alternating Na-P3/Li-O’3 heteroepitaxial nanostructure. This alternating heteroepitaxial nanostructure delivers an extremely high reversible capacity of ~ 210 mAh g−1 between 1.5 and 4.5V vs. Na/Na+, much improved cycling stability and excellent electrode kinetics. Its enhanced electrochemical performance can be ascribed to the effective suppression of the P3-P3’’ phase transition and subsequent amorphization upon cycling to 4.5V.