Nanostructuring is widely applied in both battery and hydrogen materials to improve the performance of these materials as energy carriers. Nanostructuring changes the diffusion length as well as the thermodynamics of materials. We studied the impact of nanostructuring on the hydrogenation in a model system consisting of a thin film of magnesium sandwiched between two titanium layers and capped with palladium. While we verified optically the coexistence of the metallic α-MgDx and the insulating β-MgD2–y phase, neutron reflectometry shows significant deviations from the thermodynamic solubility limits in bulk magnesium during the phase transformation. This suggests that the kinetics of the phase transformation in nanostructured battery and hydrogen storage systems is enhanced not only as a result of the reduced length scale but also due to the increased solubility in the parent phases.