Smooth modulation structure of Mg–B alloy in the quenched reaction product of Mg and amorphous B was studied. It indicates that the MgB2 formed possibly in spinodal decomposition, thus resulting in MgB2 nanodomains. It was found that the nanodomains with small angle boundaries of atomic-scale width were distributed within the subgrains that constitute the clusters in MgB2 grains. This nanostructural characteristic may be intrinsic in the quenched reaction product of Mg and amorphous B. It makes the nanodomain boundaries not act as barriers to the current percolation path, thus exhibiting no weak-link problem in the MgB2.