The Mg-isotope systematics of peridotite weathering and low-temperature carbonation have not yet been thoroughly investigated, despite their potential to provide insights into reaction pathways and mechanisms of lithosphere-hydrosphere transfer of Mg and sequestration of CO2 in carbonate minerals. Here, we present new observations of the evolution of Mg isotope ratios during subtropical ultramafic rock weathering and associated magnesite formation, including the lowest δ26Mg of magnesite reported so far. At the investigated field sites in eastern Australia, the proximity of the ultramafic Mg source rocks and associated magnesite deposits provides boundary conditions that constrain Mg isotope fractionation during low-temperature alteration. Saprolite samples from Attunga, New South Wales, show that weathering of serpentinite is accompanied by Mg loss and formation of secondary Mg-bearing clay minerals. Furthermore, Mg isotope ratios increase systematically with weathering intensity, indicating that incorporation of 26Mg into clay mineral structures controls Mg isotope fractionation during ultramafic rock weathering. The Mg-bearing clay formed by decomposition of serpentine minerals has a δ26Mg value of ∼0.35‰, which is up to ∼0.6‰ heavier than the ultramafic precursor. In contrast, nodular magnesite hosted in ultramafic rock shows δ26Mg values between −3.26‰ and −2.55‰ that are significantly lower than those of magnesite and dolomite formed by hydrothermal alteration of peridotite at higher temperature (δ26Mg = −0.69‰ and −0.62‰). The strong enrichment of 24Mg in nodular magnesite does not reconcile with simple fractionation during direct precipitation from ultramafic host rock buffered meteoric fluids and instead suggests multiple formation steps involving dissolution and re-precipitation of pre-existing carbonate accompanied by fractionation between species of dissolved Mg. Our data highlight the potential of Mg isotope studies for distinguishing the formation pathways of low temperature magnesite and for tracing Mg in low temperature alteration processes based on the distinct signatures of secondary silicate and carbonate minerals.