A combined in situ X-ray diffraction (XRD) and X-ray absorption spectroscopy (XAS) experiment was carried out to monitor hydrogen desorption from NbH0.9 nanoclusters embedded into MgH2. Just after the MgH2 → Mg transition, a NbH x bcc nanophase is detected, whose lattice parameter measured by XRD is significantly longer than the one inferred from XAS. This difference is explained considering the broad niobium hydride cluster size distribution and in particular the fact that the XRD signal, differently from the XAS one, is dominated by larger NbH x crystalline structures. The results indicate that, during the hydride to metal phase transformation of the matrix, the NbH x cluster composition depends on the cluster size. It is shown for the first time for embedded nanoparticles that faster (and complete) Nb dehydrogenation is favored for small (1.5–4 nm) clusters with respect to larger (∼20 nm) ones. The role of the matrix and of the annealing atmosphere in the stability of the Nb-related nanophases is discussed.