Addition of CO to a tetrametallic magnesium hydride cluster results in both carbon-carbon bond formation and deoxygenation to generate an acetaldehyde enolate [C2 OH3 ]- which remains coordinated to the cluster. To the best of our knowledge, this is the first example of formation of an isolable complex containing an [C2 OH3 ]- fragment from reaction of CO with a metal hydride, and the first example of CO homologation and deoxygenation at a main group metal. DFT studies suggest that key steps in the mechanism involve nucleophilic attack of an oxymethylene on a formyl ligand to generate an unstable [C2 O2 H3 ]3- fragment, which undergoes subsequent deoxygenation.