Here, we demonstrate the magnesiation mechanism of Sn nanoparticles by performing liquid-phase electron microscopy. We discover that the sluggish Mg-ion diffusion into Sn involves the formation of the intermediate metastable phase besides an equilibrium Mg2Sn phase. The large stress likely from the interface between Sn and MgxSn leads to amorphous Mg2+xSn formation with Mg2+ overinsertion. Formation of Mg(OH)(2) on MgxSn impedes Mg2+ insertion into Sn, leading to rapid capacity fading of a Mg-Sn cell. The study provides important insights into the reaction dynamics of a Sn electrode for a rechargeable Mg-ion battery.