Replacing lithium with sodium in batteries for energy storage is of enormous interest, especially from practical and economic considerations. However, it has proved difficult to achieve competitive figures of merit for sodium-ion batteries due to lack of detailed understanding of the reaction mechanism(s). Herein we report sodium electrochemical conversion reaction with Co₃O₄ nanoparticles decorated on carbon nanotubes (Co₃O₄/CNT) utilizing in-situ TEM, down to the atomic-scale. We observe synergetic effects of the two nanoscale components, which provide insights into a new sodiation mechanism, facilitated by Na-diffusion along CNT backbone and CNT-Co₃O₄ interfaces. A thin layer of amorphous low conductivity Na₂O forms on the CNT surfaces at the beginning of sodiation. Conversion reaction results in the formation of ultrafine metallic Co nanoparticles and polycrystalline Na₂O, and surprisingly fast diffusion of the reaction products. In the desodiation, the dissociation of Na₂O and formation of Co₃O₄ due to the de-conversion reaction are observed.