In this work, the deformation mechanisms underlying the room temperature deformation of the pseudomorphic body centered cubic (BCC) Mg phase in Mg/Nb nanolayered composites are studied. Nanolayered composites comprised of 50% volume fraction of Mg and Nb were synthesized using physical vapor deposition with the individual layer thicknesses h of 5, 6.7, and 50 nm. At the lower layer thicknesses of h = 5 and 6.7 nm, Mg has undergone a phase transition from HCP to BCC such that it formed a coherent interface with the adjoining Nb phase. Micropillar compression testing normal and parallel to the interface plane shows that the BCC Mg nanolayered composite is much stronger and can sustain higher strains to failure than the HCP Mg nanolayered composite. A crystal plasticity model incorporating confined layer slip is presented and applied to link the observed anisotropy and hardening in the deformation response to the underlying slip mechanisms.