The Mg-Nb and Mg-Nb2O5 hydrogen storage composite powders were prepared through arc plasma method followed by in-situ passivation. The composition, the phase component, the morphology, the particle size and the hydrogen storage properties of two powders were systematically analyzed by using inductive coupled plasma emission spectrometer (ICP), X-ray diffraction (XRD), transmission electron microscopy (TEM), pressure-composition-temperature (PCT) and thermogravimetry/differential thermal analysis (TG/DTA) techniques. ICP analyses reveal that the Nb contents of both powders reduce compared with their initial compositions. In addition, Nb content in Mg-Nb powder is higher than that in Mg-Nb2O5 powder. XRD results show that MgNb2O3.67 phase exists in Mg-Nb powder and NbO2.46 phase in Mg-Nb2O5 powder. TEM observations reveal that the MgNb2O3.67 particles are distributed more homogeneously and their particle sizes are smaller than those of the NbO2.46 particles in Mg-Nb2O5 powder. PCT analyses show that the hydrogen sorption plateaus of the Mg-Nb powder are wider and smoother with a smaller absorption/desorption gap compared to those of Mg-Nb2O5 powder. Based on Van’t Hoff equation, the hydrogenation enthalpy of the Mg-Nb powder is determined to be –73.33 kJ/mol H2, lower than the value of –82.45 kJ/mol H2 for Mg-Nb2O5 powder. TG-DTA measurements show that the hydrogenated Mg-Nb powder has a faster desorption rate and a sharper endothermic desorption peak compared to those of the hydrogenated Mg-Nb2O5 powder. The better hydrogen storage thermodynamic and kinetic properties of Mg-Nb powder may be attributed to the catalytic effect of MgNb2O3.67 generated in passivation. In contrast, the NbO2.46 phase can be reduced during hydrogenaing. Also, it has a low content and a heterogeneous distribution in Mg-Nb2O5 powder and thus possesses a poor catalytic effect. The above results show that the arc plasma method followed by in-situ passivation is an more efficient approach to produce metal-oxide hydrogen storage composite with a superior catalytic effect of oxide compared with the directly evaporated oxide