A comprehensive first-principles study on electronic structure of optimally doped $${\hbox {Ca}_{0.33}\hbox {Na}_{0.67}\hbox {Fe}_2\hbox {As}_2}$$
Ca
0.33
Na
0.67
Fe
2
As
2
under hydrostatic pressures in the presence of magnetic configurations is presented. A magneto-structural transition from a tetragonal to a collapsed tetragonal phase at 3 GPa hydrostatic pressure is predicted in double-stripe antiferromagnetic configuration that corroborates experimental observations. As the system enters the non-superconducting collapsed phase, significant deviations occur in the local structural parameters compared to those at optimal $${\it{T}}_{c}$$
T
c
values. This transition coincides with a sharp decrease in As density of states (DOS), accompanied by Fe magnetic moment collapse and substantial Fe square plane charge density modification. The structural transition induces a comprehensive reconstruction of the electronic structure, marked by distorted $$\hbox {FeAs}_{4}$$
FeAs
4
tetrahedra, potentially leading to unfavourable nesting conditions, and complete suppression of magnetism, correlating with the observed disappearance of superconductivity. Increasing pressure leads to a rise in crystal field splitting, influencing the spin-state transition in $${\hbox {Ca}_{0.33}\hbox {Na}_{0.67}\hbox {Fe}_2\hbox {As}_2}$$
Ca
0.33
Na
0.67
Fe
2
As
2
, ultimately resulting in a shift from tetragonal to non-magnetic collapsed tetragonal phase as the $$\hbox {Fe}^{2+}$$
Fe
2
+
spin state transitions to a low spin state. This demonstrates the intricate interplay between crystal field splitting, external pressure, and spin dynamics, highlighting the significant impact of magneto-volume effects on the structural phase of material under pressure.