Magnesium ion batteries (MIBs) have attracted much attention due to their low cost and high safety properties. However, the intense charge repulsion effect and sluggish diffusion dynamics of Mg2+ ions result in unsatisfactory electrochemical performance of conventional cathode materials in MIBs. This work reports water-lubricated aluminum vanadate (HAlVO) as high-performance cathode material for Mg2+ ions storage and investigates the capacity fade mechanism of water-free aluminum vanadate (AlVO). The charge density difference based on density functional theory calculation is performed to analyze the charge transfer process of water-lubricated/free aluminum vanadates (HAlVO/AlVO). The different charge transfer phenomena of two materials and the charge shielding effect of water molecule in HAlVO are revealed. Moreover, the single-phase structural evolution process and the Mg2+ ions storage mechanism of HAlVO are further investigated deeply by different in situ and ex situ characterization methods. This work proves that HAlVO is a potential candidate cathode material to satisfy the high-performance reversible Mg2+ ions storage, and the water-lubricated method is an effective strategy to improve the electrochemical performance of vanadium oxides cathode.