We present results of a detailed theoretical study of the electronic, magnetic, and structural properties of the chalcogenide parent system FeSe using a fully charge self-consistent implementation of the density functional theory plus dynamical mean-field theory (DFT+DMFT) method. In particular, we predict a remarkable change of the electronic structure of FeSe which is accompanied by a complete reconstruction of the Fermi surface topology (Lifshitz transition) upon a moderate expansion of the lattice volume. The phase transition results in a change of the in-plane magnetic nesting wave vector from (π, π) to (π, 0) and is associated with a transition from itinerant to orbitalselective localized magnetic moments. We attribute this behavior to a correlation-induced shift of the van Hove singularity of the Fe t2 bands at the M-point across the Fermi level. Our results reveal a strong orbital-selective renormalization of the effective mass m * /m of the Fe 3d electrons upon expansion. The largest effect occurs in the Fe xy orbital, which gives rise to a non-Fermi-liquid-like behavior above the transition. The behavior of the momentum-resolved magnetic susceptibility χ(q) demonstrates that magnetic correlations are also characterized by a pronounced orbital selectivity, suggesting a spin-fluctuation origin of the nematic phase of paramagnetic FeSe. We conjecture that the anomalous behavior of FeSe upon expansion is associated with the proximity of the Fe t2 van Hove singularity to the Fermi level and the sensitive dependence of its position on external conditions.