The hydrogen sorption kinetics of magnesium nanoparticles prepared by inert gas condensation and coated by a magnesium oxide layer were investigated by a volumetric apparatus. The metal-hydride transformation was studied by transmission electron microscopy of the nanoparticles both in the as-prepared state and after hydrogen cycling. In small nanoparticles (≈35 nm) hydride formation proceeds by one-dimensional growth controlled by diffusion through the hydride, while the reverse transformation to metal involves interface-controlled three-dimensional growth of nuclei formed at constant rate. Large nanoparticles (≈450 nm) exhibit very low reactivity attributed to reduced probability of hydrogen dissociation/recombination and nucleation at the particle surface.