The present work was undertaken to study the chemistry and phase formation mechanism in the salt-controlled MoO3 + Mg + NaCl thermite reaction. It was found that the structure and phase formation mechanism in the studied system primarily depend on the salt content in the initial mixtures. In salt-poor mixtures, nucleation of product particles takes place in the molten magnesium, whereas under salt-rich conditions, products are mainly formed in molten sodium chloride. Analyses of combustion temperature profiles and product microstructures and thermal analysis of reacting mixtures suggested that the molybdenum oxide reacts with the salt at early stages of the process. The formed intermediate molybdenum oxychloride and sodium molybdate then react with magnesium, yielding Mo, MgO, and NaCl phases. The low value of the activation energy (50 kJ/mol) of the combustion process also suggests that gaseous (liquid) intermediates play an important role in the phase formation mechanism.