In this study, two Mg based hydrogen storage composite powders, Mg–Y 2 O 3 and Mg–Y, were prepared through arc plasma method followed by in situ passivation. The composition, phase component, and hydrogen storage properties of the two powders were analyzed by using ICP, XRD, PCT and DTA techniques. ICP analyses revealed a reduction in Y content of both powders when compared to their initial composition, especially for the Mg–Y powder (from 25wt% down to 0.58wt%). XRD results showed the presence of Y 2 O 3 both in the Mg–Y 2 O 3 and the Mg–Y powders. PCT analyses showed that the hydrogen storage capacity of the Mg–Y 2 O 3 powder is higher than that of the Mg–Y powder. Based on van’t Hoff equation, the hydrogenation enthalpies of the Mg–Y 2 O 3 and Mg–Y powders are determined to be −75.4 and −71.8kJ/molH 2 , respectively. DTA measurements showed that the onset dehydriding temperature of the hydrogenated Mg–Y 2 O 3 powder is lower than that of the hydrogenated Mg–Y powder. The above results indicated that Y 2 O 3 has a good catalytic effect on the hydrogen sorption in Mg and the effect can be better achieved in the arc evaporated Mg–Y 2 O 3 composite powder.