Mechanical alloying of nanograined MgH 2 with addition of small amounts of FeF 3 can produce, via a fluoride transfer reaction, a nanocomposite powder containing both the transition metal and fluorine as catalysts. The solid-state phase transformations and microstructural changes during milling and/or during heating were studied by X-ray diffraction during in-situ heating, transmission electron microscopy, differential scanning calorimetry and magnetization measurements. The fluoride transfer reaction occurs partially during milling and can be completed during the first heating cycle. An improved H-desorption behavior was observed in such nanocomposite powder in comparison with the best reported values for MgH 2 -based composites.