In situ bulk metallic glass (BMG) composites generally contain a crystalline phase(s) that forms throughout the amorphous matrix during cooling from the melt. The presence of the crystalline phase in these materials is known to improve both ductility and toughness. In this study the nucleation and growth behaviour of crystalline α-Mg flakes during casting of a series of Mg–Cu–Y–Zn glass forming alloys were investigated. It was demonstrated that the α-Mg phase nucleates preferentially on the surface of micron-sized yttria (Y2O3) particles that form in the melt during casting and subsequently grow in preferential crystallographic directions to generate an intimate distribution of interwoven flakes throughout the amorphous matrix. High resolution transmission electron microscopy revealed that a thin (∼5nm) intermediate Cu layer forms at the particle–flake interface resulting in full coherency with both the particle and flake, thereby resulting in well-defined orientation relationships. The formation of this intermediate layer is argued to be the necessary precursor for nucleation of Mg flakes at the Y2O3 particles in a manner similar to that found for the preferential nucleation at TiB2 particles in conventional Al alloys. The overall effect of this intermediate layer is a reduction in the interfacial energy between the particle and nucleus, thereby lowering the thermodynamic barrier for nucleation. In general terms, inoculation controlled formation of a crystalline phase throughout an amorphous matrix in selected glass forming compositions may be a viable means of generating the desired two phase structure for generating high strength BMG composites exhibiting suitable ductility.