Transition metal dichalcogenides (TMDs) are a family of van der Waals layered materials exhibiting unique electronic, optical, magnetic and transport properties. Their technological potentials hinge critically on the ability to achieve controlled fabrication of desirable nanostructures, such as nanoribbons and nanodots. To date, nanodots/nanoislands have been regularly observed, while controlled fabrication of TMD nanoribbons remains challenging. Here we report a bottom-up fabrication of MoSe2 nanoribbons using molecular beam epitaxy, via an unexpected temperature-induced morphological phase transition from the nanodot to nanoribbon regime. Such nanoribbons are of zigzag nature, characterized by distinct chemical and electronic properties along the edges. The phase space for nanoribbon growth is narrowly defined by proper Se:Mo ratios, as corroborated experimentally using different Se fluxes, and supported theoretically using first-principles calculations that establish the crucial role of the morphological reconstruction of the bare Mo-terminated edge. The growth mechanism revealed should be applicable to other TMD systems.