NiFe and CoFe (MFe) layered double hydroxides (LDHs) are among the most active electrocatalysts for the alkaline oxygen evolution reaction (OER). Herein, we combine electrochemical measurements, operando X-ray scattering and absorption spectroscopy, and density functional theory (DFT) calculations to elucidate the catalytically active phase, reaction center and the OER mechanism. We provide the first direct atomic-scale evidence that, under applied anodic potentials, MFe LDHs oxidize from as-prepared α-phases to activated γ-phases. The OER-active γ-phases are characterized by about 8% contraction of the lattice spacing and switching of the intercalated ions. DFT calculations reveal that the OER proceeds via a Mars van Krevelen mechanism. The flexible electronic structure of the surface Fe sites, and their synergy with nearest-neighbor M sites through formation of O-bridged Fe-M reaction centers, stabilize OER intermediates that are unfavorable on pure M-M centers and single Fe sites, fundamentally accounting for the high catalytic activity of MFe LDHs.