Today, low-energy and low-carbon footprint alternatives to Portland cement are searched because of huge CO2 emissions coming from Portland clinker calcination. Because of some superior properties of magnesium oxychloride cement (MOC) and the lower carbon footprint of its production, MOC became an intensively studied material with high application potential for the design and development of construction products. In this contribution, magnesium oxychloride with stoichiometry 5Mg(OH)2∙MgCl2∙8H2O (Phase 5) was prepared and characterized. The kinetics of formation and the phase composition of the material were determined using X-ray diffraction and consequent Rietveld analysis. The morphology was studied by scanning electron microscopy, and the chemical composition was determined by both energy-dispersive spectroscopy and X-ray fluorescence. Moreover, the simultaneous thermal analysis in combination with mass spectroscopy and Fourier-transform infrared spectroscopy was employed to study the thermal stability. Using mass spectroscopy, we were able to clarify the mechanism of water and hydrochloric acid release, which was not previously reported. The observed structural and chemical changes induced by exposure of studied samples to elevated temperatures were linked with the measured residual macro and micro parameters, such as bulk density, specific density, porosity, water absorption, compressive strength, and pore size distribution. The Phase 5 revealed a needle-like crystalline morphology which formed rapidly and was almost completed after 96 h, resulting in relatively high material strength. The four-day compressive strength of magnesium oxychloride cement was similar to the 28-day compressive strength of Portland cement. The thermal stability of Phase 5 was low as the observed disruptive thermal processes were completed at temperatures lower than 470 °C.