Mg(AlH4)2 nanoparticles with a particle size less than 10 nm have been successfully synthesized by mechanochemical method using LiAlH4 and MgCl2 as raw materials together with LiCl buffering additive. In comparison to Mg(AlH4)2 microparticles, Mg(AlH4)2 nanoparticles exhibit a faster hydrogen desorption kinetics and lower desorption temperature. The hydrogen desorption temperatures of the first and second dehydrogenation steps are 80 and 220 °C for the Mg(AlH4)2 nanoparticles, which are about 65 and 60 °C, respectively, lower than those of Mg(AlH4)2 microparticles. The decomposition activation energy is reduced from 135 kJ/mol for Mg(AlH4)2 microparticles to 105.3 kJ/mol for Mg(AlH4)2 nanoparticles. It is proposed that the shortened diffusion distance and enhanced diffusivity of Mg(AlH4)2/MgH2 nanoparticles provide an energy destabilization for lowering the dehydrogenation temperature, and thus being the key factor for promoting the hydrogen desorption kinetics. More importantly, it is demonstrated that the dehydrided nano MgH2 hydride with a particle size below 10 nm can be formed after rehydrogenation process, resulting in the good cycling hydrogen desorption performance of nano MgH2.