During nanoindentation of MgO, a pop-in phenomenon has been observed, that is, an abrupt increase in penetration depth at a critical load. Atomic force microscopy investigations have been performed to characterise the dislocation structure in the vicinity of the indented area. The pop-in has been found to be the first stage of plastic deformation during nanoindentation. This phenomenon is ascribed to the nucleation and further propagation of interstitial loops of dislocations beneath the indenter. A three-dimensional model for a flat ended indenter is developed.