This article describes the design and synthesis of MgO‐modified Ni/CaO catalysts for sorption‐enhanced steam reforming of ethanol. The results show that the introduction of MgO effectively increases the dispersion of CaO via forming MgCa(CO3)2 precursor. In the prepared MgO‐modified Ni/CaO catalysts, metallic Ni exists around MgO supported on CaO. Both 100% ethanol conversion and >96% hydrogen purity can be stabilized in 10 cycles over the catalyst containing 20 wt% MgO. The interaction between metallic Ni and MgO enhances the sintering resistance of the catalyst. More importantly, reaction pathway studies have confirmed that the formation of CaCO3 hinders the activation of H2O on the Ni/CaO catalyst surface, and thus inhibits the conversion of the reaction intermediates including HCO* and CH
x*. MgO can dissociate H2O to form hydroxyl groups which participate in the conversion of the reaction intermediates, thereby the MgO‐modified Ni/CaO catalysts have better catalytic performance and carbon deposition resistance.