Na was intercalated between [Fe2S2] layers for the first time, giving a novel compound NaFe(1.6)S2. This material adopts a CaAl2Si2-type structure with ~20% iron vacancies and represents the first layered compound in a ternary Na-M-X (M = Fe, Co, Ni; X = S, Se) system. First-principles calculations reveal that phonon dynamics is an important factor for it to prefer the CaAl2Si2-type rather than the ThCr2Si2-type structure. It features a magnetic transition at 205 K and is a narrow-band-gap semiconductor.