Magnesium powder and various volume fractions of SiC particles with an average diameter of 50 nm were co-milled by a high energy planetary ball mill for up to 25 h to produce nanocrystalline Mg–SiC nanocomposite powders. The milled Mg–SiC nanocomposite powders were characterized by scanning electron microscopy (SEM) and laser particle size analysis (PSA) to study morphological evolutions. Furthermore, XRD, TEM, SEM, EDX and EBSD analysis were performed to investigate the microstructure of magnesium matrix and the distribution of SiCn-reinforcement. It was shown that with addition and increase of SiC nanoparticle content, finer particles with narrower size distribution are obtained after mechanical milling. The morphology of these particles also became more equiaxed at shorter milling times. The microstructural observation revealed that the milling process ensured uniform distribution of SiC nanoparticles in the magnesium matrix even with a high volume fraction, up to 10 vol.%. The evaluated grain size by XRD results and TEM observations confirmed that the ball milling caused a reduction of grain size of magnesium powders to the nanometer range. Moreover, it was found that the higher content of SiC particles eventuate in a decrease in grain size of magnesium matrix powders.