We found theoretically that Na has three effects on CuInSe2: (1) If available in stoichiometric quantities, Na will replace Cu, forming a more stable NaInSe2 compound having a larger band gap (higher open-circuit voltage) and a (112)tetra morphology. The ensuing alloy NaxCu1−xInSe2 has, however, a positive mixing enthalpy, so NaInSe2 will phase separate, forming precipitates. (2) When available in small quantities, Na will form defect on Cu site and In site. Na on Cu site does not create electric levels in the band gap, while Na on In site creates acceptor levels that are shallower than CuIn. The formation energy of Na(InCu) is very exothermic, therefore, the major effect of Na is the elimination of the InCu defects and the resulting increase of the effective hole densities. The quenching of InCu as well as VCu by Na reduces the stability of the (2VCu−+InCu2+), thus suppressing the formation of the “Ordered Defect Compounds.” (3) Na on the surface of CuInSe2 is known to catalyze the dissociation of O2 into atomic oxygen that substitutes Se vacancy (shallow donors), converting them into OSe. We find, however, that OSe is an (isovalent) deep rather than shallow acceptor. We also find that having removed the donors, O atoms in CuInSe2 form Cu2O and In2O3 compounds, and phase separate, forming precipitates at the surfaces and grain boundaries. Our results are compared with previous models and provide new insights into the defect physics of Na in CIS.