MgO has several advantageous characteristics and has been applied in various fields. In this study, we deposited Co nanoparticles in an island pattern on a Si substrate using an arc plasma gun (APG). We subsequently formed a MgO thin film on this substrate by metal–organic decomposition (MOD), which enables the formation of films in the atmosphere, thereby yielding a double-layer structure. The MgO thin film formed on Co nanoparticles deposited using the APG with 500 pulses of arc discharge exhibited improved crystallinity and photoelectron emission at least threefold higher than that of a MgO thin film formed directly without depositing Co nanoparticles. Although the transmittance of the specimen formed by depositing Co nanoparticles was initially 30% or lower, it increased to greater than 90% after the formation of the MgO thin film and the dispersion of the Co nanoparticles in the MgO thin film during heat treatment at 900 °C. Our results clarify that the characteristics of MgO thin films are markedly improved by depositing Co nanoparticles before forming the films. The results of Kelvin probe force microscopy (KPFM) indicate that the outermost surface of the Co material had become CoO (cobalt oxide) with the dispersion of Co nanoparticles in the MgO thin film. The lattice parameter of CoO nanoparticles (an-axis lattice parameter of 4.2615 Å) after heating matches well with that of MgO (4.2126 Å). The MgO thin films that grew in conjunction with the CoO nanoparticles were highly crystallized. We successfully established a high-performance, cost-effective bottom-up process that requires no ion injection by dispersing Co nanoparticles in a MgO thin film through heat treatment.