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Encapsulating Fe3C in carbon layers has emerged as an innovative strategy for protecting Fe3C while preserving its high oxygen reduction activity. However, fundamental questions persist regarding the active sites of encapsulated Fe3C due to the restricted accessibility of oxygen molecules to the metal sites. Herein, the intrinsic electron transfer mechanisms of Fe3C nanoparticles encapsulated in N‐doped carbon materials are unveiled for oxygen reduction electrocatalysis. The precision‐structured C1N1 material is used to synthesize N‐doped carbons with encapsulated Fe3C, significantly enhancing catalytic activity (EONSET = 0.98 V) and achieving near‐100% operational stability. In anion‐exchange membrane fuel cells, an excellent peak power density of 830 mW cm−2 is reached at 60 °C. The experimental and computational results revealed that the presence of Fe3C cores dynamically triggers electron transfer to the outermost carbon layer. This phenomenon amplifies the oxygen reduction reaction performance at N sites, contributing significantly to the observed catalytic enhancement. [ABSTRACT FROM AUTHOR]