In this study, microstructural evolution of Mg-Ni alloy during mechanical alloying (MA) was investigated. Also, a thermodynamic approach was utilized to predict the most stable phases formed in Mg-Ni alloy after MA. The phase composition and microstructural properties of Mg-Ni alloy were assessed by X-ray diffractometry, high-resolution field emission scanning electron microscopy and high-resolution transmission electron microscopy. The results showed that ball milling of magnesium and nickel powder mixture for 70 h yields nanostructural Mg 2 Ni compound with an average grain size of *20 nm. Thermodynamic calculations revealed that in the composition ranges of 0.0 \ X Mg \ 0.03 (at.%) and 0.97 \ X Mg \ 1, there is no driving force for amorphous phase formation. In the composition range of 0.07 \ X Mg \ 0.93, the change of Gibbs free energy for amorphous phase formation was more negative than solid solution. While for X Mg = 0.66 (nominal composition of Mg 2 Ni intermetallic phase), the change of Gibbs free energy for intermetallic phase was found to be more negative than both amorphous and solid solution phases indicating that Mg 2 Ni intermetallic compound is the most stable phase, in agreement with the experimental observations.