O3 layered sodium transition metal oxides (i.e., NaMO2, M = Ti, V, Cr, Mn, Fe, Co, Ni) are a promising class of cathode materials for Na-ion battery applications. These materials, however, all suffer from severe capacity decay when the extraction of Na exceeds certain capacity limits. Understanding the causes of this capacity decay is critical to unlocking the potential of these materials for battery applications. In this work, we investigate the structural origins of capacity decay for one of the compounds in this class, NaCrO2. The (de)sodiation processes of NaCrO2 were studied both in situ and ex situ through X-ray and electron diffraction measurements. We demonstrate that NaxCrO2 (0 < x < 1) remains in the layered structural framework without Cr migration up to a composition of Na0.4CrO2. Further removal of Na beyond this composition triggers a layered-to-rock-salt transformation, which converts P′3-Na0.4CrO2 into the rock-salt CrO2 phase. This structural transformation proceeds via the formation of an intermediate O3 NaδCrO2 phase that contains Cr in both Na and Cr slabs and shares very similar lattice dimensions with those of rock-salt CrO2. It is intriguing to note that intercalation of alkaline ions (i.e., Na+ and Li+) into the rock-salt CrO2 and O3 NaδCrO2 structures is actually possible, albeit in a limited amount (∼0.2 per formula unit). When these results were analyzed under the context of electrochemistry data, it was apparent that preventing the layered-to-rock-salt transformation is crucial to improve the cyclability of NaCrO2. Possible strategies for mitigating this detrimental phase transition are proposed.