Earth's inner core (IC) consists of mainly iron with some light elements. Understanding its structure and related physical properties has been elusive as a result of its required extremely high pressure and temperature conditions. The phase of iron, elastic anisotropy, and density-velocity deficit at the IC have long been questions of great interest. Here, we find that the electron correlation effect is enhanced by oxygen and modifies several important features, including the stability of iron oxides. Oxygen atoms energetically stabilize hexagonal-structured iron at IC conditions and induce elastic anisotropy. Electrical resistivity is much enhanced in comparison to pure hexagonal close-packed (hcp) iron as a result of the enhanced electron correlation effect, supporting the conventional thermal convection model. Moreover, our calculated seismic velocity shows a quantitative match with geologically observed preliminary reference Earth model (PREM) data. We suggest that oxygen is the essential light element to understand and model Earth's IC.