Atomistic computer simulation techniques have been employed to generate a model for a 25 nm3 CaO nanoparticle, encapsulated within the near surface region of an MgO lattice. We find that the ‘internal’ morphology of the resulting encapsulated CaO nanoparticle is ‘pseudo-spherical’ and exhibits {100}, {110} and {111} facets. The encapsulated nanoparticle suffers significant structural changes in comparison to the bulk parent oxide: Regions within the CaO nanoparticle are identified to suffer both tension and compression together with plane curvature. In addition a wealth of defects (isolated vacancies, interstitials and substitutionals including complex clustering) evolve within the near (1–2 atomic planes) interfacial regions of the CaO nanoparticle and surrounding MgO lattice. The CaO nanoparticle is observed to lie epitaxially with respect to the host MgO lattice with CaO{100} and MgO{100} planes aligned; dislocations evolve to accommodate the +13% bulk lattice misfit associated with the system, the core structures of which are localised at regions of poor registry between the {100} planes. The CaO nanoparticle is observed to rotate by about 6° with respect to the encapsulating MgO matrix, which results in some anisotropy in structure. Comprehensive depictions of the atomistic structure and morphology of the encapsulated CaO nanoparticle and surrounding MgO lattice are presented using molecular graphical techniques.