In single-atom catalysts (SACs), active sites can be positioned in close proximity without forming direct chemical bonds, allowing their catalytic behavior to be modulated through inter-site interactions. However, the atomic-level mechanisms underlying these site proximity effects remain poorly understood. Herein, employing constant-potential density functional theory calculations, we systematically investigate the influence of site proximity on the oxygen reduction reaction (ORR) activity of Fe SACs embedded in pyridinic N-doped graphene (FeN4 SACs). A series of dual-site models (FeN4 DSACs) are constructed, encompassing pristine, axial OH-ligated, and axial O-ligated configurations, along with their corresponding isolated counterparts. Thermodynamic analyses reveal that nearly all FeN4 DSACs exhibit enhanced or comparable stability compared to experimentally reported systems. More importantly, site proximity markedly modulates the ORR activity of Fe centers in DSACs compared to their isolated analogues, and the enhancement up to 103 times is observed for axial OH-ligated FeN4 DSACs. Moreover, the Fe d-band center and charge state exhibit linear correlations with the ORR overpotential, while the Fe spin magnetic moment shows a volcano-like relationship with the overpotential, suggesting these properties as effective descriptors of ORR activity. These findings provide useful insights into the site proximity effect in FeN4 SACs on ORR, and highlight its potential as a design principle for high-performance single-atom electrocatalysts.