A detailed study is presented on the formation of MoO2 nanoparticles from the dissolution of the precursor to the final rodlike product, with a focus on the exploration of the inorganic reaction occurring ahead of the nucleation step, and interplay between size and crystal structure of MoO2. In situ X-ray absorption spectroscopy experiments show that the crystallization and the growth process of MoO2 nanorods is initiated by rapid reduction of the MoO2Cl2 precursor in benzyl alcohol and acetophenone. This reaction triggers the nucleation of 2 nm MoO2 particles with spherical shape and hexagonal crystal structure. The transformation from spheres into rods emerges as a complex process driven by oriented attachment. High-resolution transmission electron microscopy and X-ray diffraction results provide evidence that the 2 nm particles first aggregate into 5–20 nm-large oriented assemblies. The increase in particle size induces the phase transition from hexagonal to the less symmetrical monoclinic crystal structure, and finally the transformation into rods. Is it shown that electrodes for lithium-ion batteries based on MoO2 nanorods have a long-term cycling life. The specific discharge capacity even after 200 cycles at a discharge rate of 1 C is about 300 Ah kg−1.