This work investigates the effect of carbon nanotubes (CNTs) on hydrogen ad/desorption when formed nanocomposites with magnesium. It is found that CNTs significantly enhanced both the hydrogen storage capacity and kinetics, owing to the atomic interaction of C-Mg, residual of tubular structure of CNTs and dispersive effect of carbon in ball milling process. By first principles calculations, C-Mg interaction forms a channel for hydrogen atoms to transport into Mg structure. Tubular CNTs allow hydrogen to easily move within Mg matrix. Additives of carbon improve the ball milling effect to produce much finer Mg grains that enable the fast hydrogenation and increase the fraction of Mg hydrides, e.g. increase the capacity.