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Chronic atrophic gastritis (CAG) is a well-recognized precursor of gastric cancer (GC). Spasmolytic polypeptide-expressing metaplasia (SPEM) is a key intermediate state during this process, representing a reparative response to gastric mucosal injury, and may promote the development of malignancy under persistent inflammation. Recent studies have suggested that SPEM is not a static lesion but a dynamic and heterogeneous process regulated by epithelial injury, oxyntic atrophy, and chronic inflammation. This review summarizes current knowledge on cellular plasticity, lineage dynamics, and molecular mechanisms underlying SPEM formation and progression in CAG. We focus on recent advances in oxyntic atrophy, immune cell and inflammation, as well as oxidative stress in gastric epithelial remodeling, and highlight emerging evidence implicating ferroptosis, a regulated form of iron-dependent lipid peroxidation, in gastric mucosal inflammation and SPEM development. By integrating classical models of GC with recent mechanistic insights, we aim to discuss the role of SPEM in CAG-associated GC risk and to identify potential therapeutic targets related to oxyntic atrophy, inflammation, and ferroptosis. These emerging findings offer new perspectives for future research aiming at risk stratification and precision prevention.