We use ab initio density functional theory + U calculations to characterize the oxide ion diffusion process in bulk Sr2Fe1.5Mo0.5O6−δ (SFMO) by analyzing the formation and migration of oxygen vacancies. We show that SFMO's remarkable ionic conductivity arises from its intrinsic content of oxygen vacancies and a predicted very low migration barrier of such vacancies. Theoretical analysis of the electronic structure reveals a crucial role played by strongly hybridized Fe 3d/O 2p states to achieve the attendant mixed ion-electron conductor character so important for intermediate temperature fuel cell operation. We predict a next-nearest-neighbor-type migration pathway for the O2− ion should dominate. The low energy barrier of this pathway is mainly related to electrostatic interactions with homogeneously distributed Mo in the SFMO sublattice. We identify the reasons why Fe-rich perovskites, with the key addition of a certain concentration of Mo, produce excellent electronic and ionic transport properties so crucial for efficient operation of intermediate temperature solid oxide fuel cells.