The application of MgO–SiO2–H2O system, one of the most popular basic refractories, is greatly limited because of the hydration of MgO. In this work, the phase and morphological development of MgO–SiO2–H2O system during aging were analyzed using various techniques. It is found that Mg(OH)2 initially appears and the amount increases after 10 days aging at room temperature. At elevated temperature, the heat treatment can facilitate the hydration reaction. Mg(OH)2 covers the surface of silica fume particles. The combination product connects with each other and distributes homogeneously around MgO particles to produce M–S–H gels, which inhibit the further hydration.