A hybrid nanocomposite of FeF3·0.5H2O and MWCNTs is synthesized as a high–performance cathode material for room–temperature sodium–ion batteries. The composite exhibits remarkably high capacity (197 mAh g−1) and stable cycle performance (148 mAh g−1 at the 100th cycle with a 0.05 C rate) accompanying with the unique nanostructure of the material and the incorporation of MWCNTs. The addition of MWCNTs not only increases the conductivity of the active material but also plays a role to design a unique morphology where nano-sized FeF3·0.5H2O particles are grown both inside and outside of the MWCNTs. The sodium diffusion coefficient of the composite material is determined by galvanostatic intermittent titration technique during dis/charging and the values are in the range of 10−12–10−14 cm2 s−1 which are lesser than lithium diffusion coefficient of FeF3 (10−10–10−12 cm2 s−1). In situ X–ray diffraction coupled with ex situ high resolution transmission electron microscopy is employed to investigate the phase transition behavior. The results reveal both crystalline and amorphous phases upon Na insertion. Furthermore, ex situ NEXAFS spectroscopy (at the F K–edge and Fe L3–edge) is conducted at different potential steps to determine the change in oxidation state and local structure. NEXAFS spectra reveal the conversion reaction mechanism and reversibility of the material as evidenced by the de/formation of NaF during de/sodiation process. The combined study of in situ XRD and NEXAFS will give valuable information on de/sodiation reactions in FeF3·0.5H2O.