Previous studies of ab initio density functional theory (DFT) calculations have predicted that reactions between LiBH4 and MgH2 can take place at temperature near 200 °C. However, such predictions have been shown to be inconsistent with many experiments. Herein, we have designed a novel process termed as ball milling with aerosol spraying (BMAS) to prove, for the first time, that the reaction between LiBH4 and MgH2 can indeed occur during ball milling at room temperature. Through this BMAS process we have demonstrated unambiguously the formation of MgB2 and LiH during ball milling of MgH2 while aerosol spraying of the LiBH4/THF solution. In this BMAS process, aerosol spraying of the LiBH4/THF solution leads to the formation of LiBH4 nanoparticles which decompose to form Li2B12H12. The Li2B12H12 formed then reacts with MgH2 in situ during ball milling to form MgB2 and LiH. The discovery made in this study has significant implications in making LiBH4 + MgH2 as a viable system for reversible hydrogen storage applications near ambient temperature in the future.