Based on chemical modeling of phase equilibria for the NH4Cl‐MgCl2‐AlCl3‐H2O system, a practical approach to produce Mg‐Al spinel (MgAl2O4) (widely used as refractory brick, supports in catalysts, and inert material for oxygen carriers) is proposed and proven feasible. This novel process includes coprecipitation of Mg4Al2(OH)14·3H2O from the NH3‐MgCl2‐AlCl3‐H2O system; calcination of Mg4Al2(OH)14·3H2O to obtain Mg‐Al spinel and recovery of NH4Cl from NH4Cl‐rich solutions by feeding MgCl2‐AlCl3. A MSMPR reactor was applied to investigate the effect of temperature, feed concentration, and NH4Cl addition on coprecipitation of precursor Mg4Al2(OH)14·3H2O from MgCl2‐AlCl3 solutions with Mg/Al ratio = 2 through gradual addition of NH4OH. The phase equilibria of the NH4Cl‐MgCl2‐AlCl3‐H2O system were determined over the temperature range 283.2 to 363.2 K using dynamic method. The experimental solubilities were regressed to obtain new Bromley‐Zemaitis model parameters. These newly obtained parameters were verified by predicting the quaternary system. A chemical model for the NH4Cl‐MgCl2‐AlCl3‐H2O system has been established with the OLI platform. All the results generated from this study will provide the theoretical basis for Mg‐Al spinel production. The high quality Mg‐Al spinel was prepared by calcination of precursor from 773.2 to 1273.2 K, and the NH4Cl was successfully recovered through the common ion effect of MgCl2‐AlCl3 addition. © 2012 American Institute of Chemical Engineers AIChE J, 59: 1855–1867, 2013