Mixed-anion oxyfluorides (i.e., FeOxF2-x) are an appealing alternative to pure fluorides as high-capacity cathodes in lithium batteries, with enhanced cyclability via oxygen substitution. However, it is still unclear how the mixed anions impact the local phase transformation and structural stability of oxyfluorides during cycling due to the complexity of electrochemical reactions, involving both lithium intercalation and conversion. Herein, we investigated the local chemical and structural ordering in FeO0.7F1.3 at length scales spanning from single particles to the bulk electrode, via a combination of electron spectrum-imaging, magnetization, electrochemistry, and synchrotron X-ray measurements. The FeO0.7F1.3 nanoparticles retain a FeF2-like rutile structure but chemically heterogeneous, with an F-rich core covered by thin O-rich shell. Upon lithiation the O-rich rutile phase is transformed into Li-Fe-O(-F) rocksalt that has high lattice coherency with converted metallic Fe, a feature that may facilitate the local electronic and ionic transport. The O-rich rocksalt is highly stable over lithiation/delithiation and thus advantageous to maintain the integrity of the particle, and due to its predominant distribution on the surface, it is expected to prevent the catalytic interaction of Fe with electrolyte. Our findings of the structural origin of cycling stability in oxyfluorides may provide insights into developing viable high-energy electrodes for lithium batteries.