The abundant resource of sodium (Na) makes the Na-ion batteries a promising alternate to the Li-ion batteries in electric energy storage, especially when iron (Fe)-based oxide electrodes are used. Layer-structured NaxFey M 1-yO2 (M for Mn and Ni, etc.), for example, has drawn much attention and is one type of the most attractive cathode materials for the Na-ion batteries. However, the poor cycling performance hinders their applications and the underneath mechanism for their poor performances remains unclear. In this study, the structural transition of NaFeO2 was characterized and the driving forces for the irreversible Fe migration and O oxidation were explored during Na extraction. The Fe migration from the Fe layer to the Na layer was observed for the first time at the atomic scale. The chemical states and coordination environment of the Fe ions within the Na layer were determined. The density functional theory (DFT) calculations were carried out to understand the Fe migration and O oxidation. These findings provide helpful revelation on constructing the structure and improving the performance of the NaFeO2-structured cathode materials for the Na-ion batteries.