It is known that the reaction between magnesium powder and water can result in explosions and fire incidents. The reaction, which generates heat and flammable gases, exhibits spontaneous combustion, and makes firefighting challenging. To implement appropriate measures for preventing explosions and fire incidents, an understanding of the thermal hazards of the reaction is necessary. Thermal analysis is an effective method to investigate the thermal hazards of chemical reactions, but consideration must be given to the fact that the latent heat of water evaporation affects thermal behaviour which is estimated by thermal analysis. In this study, the effect of latent heat was observed in the reaction between magnesium powder and water. Therefore, a correction method to eliminate the effect of latent heat was proposed. The correction method was applied to the reaction of magnesium powder with water, and it was revealed that the effect of the latent heat decreased the reliability of the kinetic analysis. Moreover, the effect changed the apparent activation energy and pre-exponential factor. It was found that this change resulted in either underestimation or overestimation of the thermal hazard of the chemical reaction. The effect of latent heat decreased with the decreasing rate of heat generation of the reaction.