Environmental transmission electron microscopy has been used to probe the mechanisms that govern Mg(OH)2 dehydroxylation and rehydroxylation processes at the near-atomic level. Dehydroxylation and rehydroxylation rates for these in-situ observations were controlled by regulating the water vapour pressure over the sample. Generally, the dehydroxylation proceeded via the nucleation and growth of an oxide lamella, resulting in the formation of oxide and/or oxyhydroxide regions within the reaction matrix. Competition between rapid-nucleation–slow-growth and slow-nucleation–rapid-growth mechanisms can dramatically impact the nanostructure formed during dehydroxylation. Steps, both parallel and perpendicular to the {0001} planes, were observed to form during dehydroxylation. The nanocrystalline MgO formed was highly reactive and readily rehydroxylated with increasing water vapour pressure. Rehydroxylation proceeded via the nucleation and growth of Mg(OH)2 crystals in the heavily dehydroxylated matrix. The partial edge dislocations formed (both parallel and perpendicular to {0001}brucite) as the result of Mg(OH)2 nanocrystal intergrowth and anneal out with time, resulting in the formation of relatively large single crystals of Mg(OH)2. Such high mobility of Mg-containing species during rehydroxylation can be directly associated with the high chemical reactivity observed during rehydroxylation, which can facilitate key reaction processes, such as CO2 mineral sequestration.