In this work we present a unique transmission electron microscopy study of the thermal stability of gas phase synthesized Mg nanoparticles, which have attracted strong interest as high capacity hydrogen storage materials. Indeed, Mg nanoparticles with a MgO shell (∼3 nm thick) annealed at 300 °C show evaporation, void formation, and void growth in the Mg core both in vacuum and under a high pressure gas environment. This is mainly due to the outward diffusion and evaporation of Mg with the simultaneously inward diffusion of vacancies leading to void growth (Kirkendall effect). The rate of Mg evaporation and void formation depends on the annealing conditions. In vacuum, and at T=300 °C, the complete evaporation of the Mg core takes place (within a few hours) for sizes ∼15-20 nm. Void formation and growth has been observed for particles with sizes ∼20-50 nm, while stable Mg nanoparticles were observed for sizes >50 nm. Furthermore, even at relative low temperature annealing (as low as 60 °C), void formation and growth occurs in 15-20 nm sized Mg nanoparticles, indicating that voiding will be even more dominant for nanoparticles smaller than 10 nm. Our findings confirm that Mg evaporation and void formation in nanoparticles with sizes less than 50 nm present formidable barriers for their applicability in hydrogen storage, but also could inspire future research directions to overcome these obstacles. © 2010 American Institute of Physics.