The density functional theory (DFT) method was used to study the effect of nanoconfinement on the energetics of Mg-MgH2 systems. Varying levels of loading of the Mg/MgH2 particles into a (10,10) carbon nanotube were examined, and the corresponding energetics were computed. A clear trend was observed that, as the level of loading increases (increasing confinement), the net energy change in the hydrogen sorption/desorption processes decreases to a significant level when the loading approaches the maximum. The confinement was found not to depend on the tube length of the confining nanotubes.