Abstract In this study, the phase composition, morphology, and element distribution of Mg impurities in a low-grade titanium slag and in its chlorinated residue after carbochlorination were identified using XRD, SEM-EDS, and MLA. Most Mg impurities existed as anosovite, rutile, titanaugite, and Ti silicate phases before the carbochlorination process. The thermodynamic analysis revealed that the chlorination tendencies of Mg, Ti, Ca, Fe, and Mn oxides in the original titanium slag was much higher than those of Si and Al oxides in the temperature range of 700–850 °C. In addition, the binary phase diagram analysis indicates that the magnesium chloride (MgCl2) byproduct formed Na2MgCl4 eutectic salts in the NaCl-based salt bath. The carbochlorination experiments of the Mg-bearing titanium slag show that the chlorination ratio of magnesium oxide was above 93% under the suitable industrial conditions used for the extraction of titanium from Mg-bearing titanium slag. In addition, the formation of Na2MgCl4 eutectic salts after carbochlorination was confirmed, indicating that the negative effect of MgCl2 on the chlorination process was effectively eliminated. The Mg impurities in the chlorinated residue existed as titanaugite, quartz, chlorite, and rutile phases. Furthermore, we found that the carbochlorination of Mg-bearing titanium slag in chloride media effectively improved the comprehensive utilization efficiency of the Mg-bearing titanium slag. We believe that the proposed carbochlorination mechanism of the Mg-bearing titanium slag will provide thorough understanding and useful guidance on the practical industrial application of Mg-bearing titanium slag.