Abstract Layered oxides for Na‐ion batteries containing Fe have attracted strong interest mainly due to their low cost. However, full oxidation of Fe 3+ to Fe 4+ is rarely seen before O‐redox sets in and is typically accompanied by voltage and capacity fade on cycling. On charging P2‐Na 0.67 [Fe 0.5 Mn 0.5 ]O 2 , Fe 3+ is oxidized to only ≈ Fe 3.3+ before the onset of O‐redox. O‐redox occurs when the Na content is sufficiently low (Na ≈ 0.3) to permit the transition from P‐type to O‐type stacking, thus enabling Fe 3+ migration to the Na layer. Fe 3+ migration generates cation vacancies in the transition metal layer, forming □‐O‐□ configurations, which trigger the onset of O‐redox. In contrast, doping this material with Mg 2+ to form P2‐Na 0.67 [Fe 0.25 Mn 0.6 Mg 0.15 ]O 2 allows full oxidation of Fe 3+ to Fe 4+ before the Na content is low enough to favor O‐type stacking. During O‐redox, Mg 2+ is displaced into the Na layers instead of Fe. Mg substitution enables greater reversibility of the Fe 3+ /Fe 4+ redox couple and significantly suppresses Fe migration, which is responsible for the voltage and capacity fade observed for P2‐Na 0.67 Fe 0.5 Mn 0.5 O 2 .