Careful development and optimization of negative electrode (anode) materials for Na-ion batteries (SIBs) are essential, for their widespread applications requiring a long-term cycling stability. BiFeO3 (BFO) with a LiNbO3-type structure (space group R3c) is an ideal negative electrode model system as it delivers a high specific capacity (770 mAh g–1), which is proposed through a conversion and alloying mechanism. In this work, BFO is synthesized via a sol–gel method and investigated as a conversion-type anode model-system for sodium-ion half-cells. As there is a difference in the first and second cycle profiles in the cyclic voltammogram, the operating mechanism of charge–discharge is elucidated using in operando X-ray absorption spectroscopy. In the first discharge, Bi is found to contribute toward the electrochemical activity through a conversion mechanism (Bi3+ → Bi0), followed by the formation of Na–Bi intermetallic compounds. Evidence for involvement of Fe in the charge storage mechanism through conversion of the oxide (Fe3+) form to metallic Fe and back during discharging/charging is also obtained, which is absent in previous literature reports. Reversible dealloying and subsequent oxidation of Bi and oxidation of Fe are observed in the following charge cycle. In the second discharge cycle, a reduction of Bi and Fe oxides is observed. Changes in the oxidation states of Bi and Fe, and the local coordination changes during electrochemical cycling are discussed in detail. Furthermore, the optimization of cycling stability of BFO is carried out by varying binders and electrolyte compositions. Based on that, electrodes prepared with the Na-carboxymethyl cellulose (CMC) binder are chosen for optimization of the electrolyte composition. BFO–CMC electrodes exhibit the best electrochemical performance in electrolytes containing fluoroethylene carbonate (FEC) as the additive. BFO–CMC electrodes deliver initial capacity values of 635 and 453 mAh g–1 in the Na-insertion (discharge) and deinsertion (charge) processes, respectively, in the electrolyte composition of 1 M NaPF6 in EC/DEC (1:1, v/v) with a 2% FEC additive. The capacity values stabilize around 10th cycle and capacity retention of 73% is observed after 60 cycles with respect to the 10th cycle charge capacity.