We sought the origin of the metal-insulator transition in Sr 2−x La x CoO 4 , using electron-correlation corrected density functional calculations. Our results show that Sr 2 CoO 4 is in an intermediate-spin (IS, t 4 2g e 1 g ) state and a strong Co 4+ 3d-O 2p hybridization is responsible for its ferromagnetic metallicity. Upon La doping, however, a spin-state transition occurs in Sr 1.5 La 0.5 CoO 4 : IS Co 4+ × 2 + 1e → LS Co 4+ (t 5 2g ) + HS Co 3+ (t 4 2g e 2 g ) (LS: low spin; HS: high spin). Then the spin-state transition suppresses an electron hopping via a spin blockade and gives rise to the insulating behavior of Sr 1.5 La 0.5 CoO 4 . A corresponding superexchange accounts for its ferromagnetism. Thus the spin state could provide a way to tune materials properties.