Ti3C2TX (Mxene) is a new attractive reinforcement in composites due to its two-dimensional structure, excellent mechanical properties and active surface, but in metal matrix composites Ti3C2TX has been neglected for its poor performance. To improve the strengthening ability of Ti3C2TX in magnesium (Mg) matrix composites, the surface functional groups of Ti3C2TX are modified by thermal reduction. After thermal reduction, it is found that the oxygen-containing functional groups combined with the inner C atoms in the Ti3C2TX increase significantly, which reduces the structural stability of Ti3C2TX and promotes the interface reaction between the Ti3C2TX and Mg matrix. The violent interface reaction leads to the partial oxidation of Ti3C2TX sheets and increase of the in-situ synthesized MgO particles, which strengthens the interface bonding. In comparison to the original Ti3C2TX, the thermally reduced Ti3C2TX shows a better performance in improving the mechanical properties. This study provides new insights into the interface design and oxides formation mechanism of advanced Ti3C2TX/Mg matrix composites with enhanced mechanical properties.