The thermal topotactic transformation mechanism of MgAl layered double hydroxides (LDHs) is investigated by a combined theoretical and experimental study. Thermogravimetric differential thermal analysis (TG-DTA) results reveal that the LDH phase undergoes four key endothermic events at 230, 330, 450, and 800 °C. DFT calculations show that the LDH decomposes into CO2 and residual O atoms via a monodentate intermediate at 330 °C. At 450 °C, the metal cations almost maintain their original distribution within the LDH(001) facet during the thermal dehydration process, but migrate substantially along the c-axis direction perpendicular to the (001) facet; this indicates that the metal arrangement/dispersion in the LDH matrix is maintained two-dimensionally. A complete collapse of the layered structure occurs at 800 °C, which results in a totally disordered cation distribution and many holes in the final product. The structures of the simulated intermediates are highly consistent with the observed in situ powder XRD data for the MgAl LDH sample calcined at the corresponding temperatures. Understanding the structural topotactic transformation process of LDHs would provide helpful information for the design and preparation of metal/metal oxides functional materials derived from LDH precursors.