Different from conventional method, we have produced nanoparticles of Mg, Fe, Co, Ni, Cu and other metals by hydrogen plasma metal reaction (HPMR) in semi-industrial scale. Using these elemental nanoparticles as raw materials, nanostructured Mg-based compounds with high purity including Mg2Ni, Mg2Co, Mg2Cu and Mg2FeH6 are further synthesized by gas–solid reaction in much mild conditions. The Mg2Ni nanoparticles of 50 nm can be prepared at 523 K under 4 MPa H2. The formation mechanisms of the elemental nanoparticles during HPMR and the nanostructured Mg-based compounds during gas–solid reaction are discussed. The nanostructure of these samples greatly enhances the kinetic properties of hydrogen absorption and desorption. The Mg2Ni nanoparticles can absorb hydrogen and saturate at 0.95 H M−1 (the number of hydrogen atoms per metal atom) in several minutes at 493 K. The sorption kinetics of the nanostructured Mg2Ni is almost stable during ten cycles. The thermodynamic properties of these nanostructured Mg2M are improved slightly.