Doping with oxygen and nitrogen in graphite felt (GF) is critical for enhancing the activity of the electrode material in vanadium redox flow batteries (VRFB). In this paper, we present a combined approach that utilizes Fe etching and nitrogen functionalization by means of K2FeO4 and NH3 to modify the surface structure of graphite fibers. The results show that the innovative approach enhances the disordered structure of the surface carbon of GF and substantially improves the oxygen and nitrogen functionalized groups. This modified GF is completely hydrophilic, and its assembled electrode energy efficiency is 80.08% at a current density of 80 mA∙cm−2, compared with 69.87% for the pristine GF. The energy efficiency of the modified GF was maintained at 81.8% after 50 charge-discharge cycles. This can be attributed to the reduced internal resistance of these modified GF electrode as well as to the improved mass transport and charge redox exchange towards VO2+/VO2+ redox couple. The combined approach of Fe etching and nitrogen functionalization significantly enhances the electrochemical activity of the GF electrode. This improves the performance of the VRFB.