The potential for Mg and Mg-Ni alloys to be used as hydrogen storage alloys has been known for some time. Although the maximum storage capacity in these alloys is high (7.6wt%H2 for Mg and 3.4wt%H2 for Mg2Ni), they have, until recently, been disregarded for practical applications due to their slow kinetics and high reaction temperatures. This paper discusses the recent discovery that the non-faceted/faceted hypo-eutectic Mg-Mg2Ni system can, similar to Al-Si eutectic alloys, be modified by trace additions and that this results in improved hydrogen storage properties. The hydrogen storage properties depend on the composition, including trace levels of modifying elements, and processing conditions. In alloys of optimal composition it has been shown that the reversible storage of 6.5-7wt% H2 is possible at a rate of reaction that is far better than that previously documented. In addition, the alloy can be satisfactorily processed in air, as opposed to controlled atmospheric conditions. This paper discusses the mechanism of improved hydrogen absorption/desorption kinetics when eutectic Mg-Ni hypo-eutectic alloys are modified. This discussion is based on atomic scale analysis using electron microscopy and examination with synchrotron radiation.