The growth mechanism of Ni-germanosilicide in Si0.5Ge0.5 NW with and without silicon dioxide shell encapsulation was investigated using transmission electron microscope imaging with in situ annealing of SiGe NW array samples capped with Ni. At 200 and 400 °C, the interfacial reaction is minimal while at 600 °C, we can observe the gradual formation of a thin Ni-germanosilicide filament for the unconstrained SiGe NW. This observation is concomitant with material loss from the sides of the SiGe NW, which eventually leads to void formation. Energy dispersive X-ray spectroscopy analysis along the SiGe NW shows that Ge atoms out-diffused from the NW toward the Ni source during annealing. Excessive out-diffusion of Ge atoms and void formation are shown to be retarded in the encapsulated SiGe NW with compressive stress.