The crystallization process of MgAl2O4 in molten steel begins with nucleation, which determines the structure and size of MgAl2O4 inclusions and is important to investigate the formation mechanism of inclusion. In this work, DFT method was used to calculate the structures and properties of MgAl2O4 clusters and crystal. the formation pathway of MgAl2O4 inclusions at atomic scale in molten has been discussed by the two-step nucleation method. There are three ways to form MgAl2O4 inclusions, and the formation pathways of MgAl2O4 inclusions in steel were decided by the critical values of log([% Mg][% Al]2[% O]4), log([% Mg][% O]) and log([% Mg]3/[% Al]2), respectively, and the critical values of MgAl2O4 inclusions in the three case decreased with the decreasing of temperature. In the nucleation process of MgAl2O4, (MgAl2O4)n clusters can formed by the reactions of [Mg], [Al] and [O], or by the reaction of [Mg], [O] and (Al2O3)n, or by the reaction of [Mg] and (Al2O3)n in steel. The thermodynamic driving force for the formation, aggregation and transformation of (MgAl2O4)n clusters increased with decreasing of temperature.