A combined study of density functional theory calculations and experiments was performed to understand the role of Nb dissolved magnesium oxide (MgO) surfaces in improving the hydrogen storage performance of magnesium hydride (MgH₂). Differential scanning calorimetry (DSC) studies confirm that MgH₂ releases hydrogen at comparatively lower temperatures when MgO additive is replaced by Nb dissolved MgO. In order to verify this theoretically, two additive clusters, Mg₄O₄ and Mg₃NbO₄ were modeled by density functional theory technique and their interaction with H₂ and MgH₂ was investigated. The analysis confirms that the most favorable interaction, in terms of minimum energy structures, binding behavior and hydrogenation, can be achieved by the Mg₃NbO₄ additive. Interaction between Nb dissolved MgO cluster and MgH₂ cluster is explained with the support of the highest occupied molecular orbital (HOMO)/lowest unoccupied molecular orbital (LUMO)/singly occupied molecular orbital (SOMO) surfaces and the related aspects of catalysis is discussed.