Abstract: Air-breathing electric propulsion (ABEP) is a key enabling technology for very-low Earth orbit (VLEO) spacecraft to overcome atmospheric drag and achieve long-term on-orbit operation. To gain a deeper understanding of the discharge ionization mechanism and beam acceleration characteristics of air-breathing radio-frequency ion thrusters, a two-dimensional axisymmetric PIC-MCC numerical simulation was carried out for the RIT-10 thruster using a nitrogen–oxygen propellant chemical reaction model combined with an equivalent transparency method. Under the typical operating condition of 144.5 W radio-frequency power, the dominant ion species in the discharge chamber were N₂⁺ and O⁺. Since the dissociation energy of nitrogen molecules exceeds the mean electron energy in the discharge chamber, and the dissociation reaction cross-section is smaller than the ionization cross-section in this energy range, nitrogen molecules undergo predominantly direct ionization with limited dissociation. In contrast, the dissociation energy of oxygen molecules is lower than the mean electron energy, and the dissociation cross-section is significantly larger than the ionization cross-section, so the majority of oxygen molecules are dissociated into oxygen atoms, which are subsequently ionized to form O⁺. As the radio-frequency power increases from 67.8 W to 144.5 W, both the electron absorbed power and the mean electron energy in the discharge chamber increase synchronously, and both exhibit double-frequency oscillation characteristics within the radio-frequency cycle. Among the various reaction pathways for electron energy loss, nitrogen molecule reactions account for the largest share of power dissipation, which first decreases and then increases with rising power; the trend for nitrogen atom reactions is opposite. The power loss fraction attributable to oxygen molecule reactions decreases continuously with increasing power, while that of oxygen atom reactions increases continuously. Simulation results for beam acceleration characteristics show that ions passing through the three-grid system composed of the screen grid, acceleration grid, and deceleration grid are first accelerated and then decelerated, with most ions at the grid exit reaching an energy close to 1500 eV, corresponding to the potential difference between the screen grid and the deceleration grid. As power increases, the mean potential in the discharge chamber rises slightly and the mean axial ion velocity increases accordingly. The above results reveal the discharge ionization behavior and beam acceleration mechanism of the thruster operating on nitrogen–oxygen propellant, and provide a numerical reference for the performance optimization and engineering design of air-breathing radio-frequency ion thrusters.