One of the promising positive electrode materials for sodium ion batteries (SIB) is sodium layered oxides (Na_xMO₂) due to its high capacity, fast ionic diffusion, and simple synthetic process. Unlike lithium ion batteries, in which O3-layered lithium compounds showed better performance and therefore have now been successfully commercialized, P2-layered compounds have been reported for better cyclability and structural stability during electrochemical reactions than O3-structure in SIBs. The phase transformations of layered compounds during electrochemical reactions are a pivotal feature for understanding the relationship between layered structures and electrochemical properties. Therefore, systematic structural study of P2-layered compounds for SIB is highly needed. In this study, a combination of in situ diffraction study using a capillary-based microbattery cell and ex situ X-ray absorption spectroscopy were utilized to reveal the phase transition mechanism for the ternary transition metal system (Fe–Mn–Co) with P2 stacking. The in situ XRD showed structural change from P2 to O2 in P2–Na_0.7Fe_0.4Mn_0.4Co_0.2O₂ compound at the voltage plateau above 4.1 V during desodiation and subsequent restoration to P2 structure upon sodiation. At fully charged state, volumetric contraction of the lattice was observed, which was due to the significant decrease in the lattice parameter c of the O2 structure. This study on the electrochemical behavior of each transition metal in P2–Na_0.7Fe_0.4Mn_0.4Co_0.2O₂ via X-ray absorption spectroscopy indicate that all transition metals are contributing to the reduction/oxidation process.