We report the direct spectroscopic observation of a metal to correlated-insulator transition in the family of iron-based superconducting materials. By means of optical spectroscopy we demonstrate that the excitation spectrum of NaFe1−xCuxAs develops a large gap with increasing copper substitution. Dynamical mean-field theory calculations show a good agreement with the experimental data and suggest that the formation of the charge gap requires an intimate interplay of strong on-site electronic correlations and spin-exchange coupling, revealing the correlated Slater-insulator nature of the antiferromagnetic ground state. Our calculations further predict the high-temperature paramagnetic state of the same compound to be a highly incoherent correlated metal. We verify this prediction experimentally by showing that the doping-induced weakening of antiferromagnetic correlations enables a thermal crossover from an insulating to an incoherent metallic state. Redistribution of the optical spectral weight in this crossover uncovers the characteristic energy of Hund's-coupling and Mott-Hubbard electronic correlations essential for the electronic localization. Our results demonstrate that NaFe1−xCuxAs continuously transitions from the typical itinerant phases of iron pnictides to a highly incoherent metal and ultimately a correlated insulator. Such an electronic state is expected to favor high-temperature superconductivity.