In current study various aspects of catalyst development for the Sabatier type methanation reaction were investigated. It was demonstrated that starting from 330–380 °C Mg2NiH4 hydride heating under CO2 and H2 gas flow initiates hydride decomposition, disproportionation and oxidation. These reactions empower catalytic properties of the material and promotes CO2 methanation reaction. Detailed structural, colorimetric and thermogravimetric analysis revealed that in order to have fast and full-scale development of the catalyst (formation of MgO decorated by nanocrystalline Ni) initial hydride has to be heated above 500 °C. Another considerable finding of the study was confirmation that potentially both high grade and low grade starting Mg2Ni alloy can be equally suitable for the hydride synthesis and its usage for the promotion of methanation reactions.