1,3,5,7-Tetranitro-1,3,5,7-tetraazacyclooctane (HMX) is one of the most powerful and widely used explosives. 3,7-Dinitro-1,3,5,7-tetraazabicyclo[3.3.1] (DPT) is an important precursor in the production of HMX. A new reaction mechanism including nitrolysis, nitrosolysis and nitrolysis processes in fuming HNO3 was put forward. The stable key intermediate 1-nitroso-3,5,7-trinitro-1,3,5,7-tetraazacyclooctane (MNX) was isolated and characterized. Based on the new mechanism, a stepwise method to prepare HMX from DPT was developed. The influence factors on the yields of MNX such as reaction temperature, loading amounts of HNO3, NaNO2 and NH4NO3 were investigated. Under the optimized conditions, MNX was obtained with a satisfactory yield of 84.0%. MNX could be efficiently and smoothly nitrolyzed in fuming nitric acid and afforded pure beta-HMX with excellent yield up to 92.8%. The overall yield of the stepwise procedure was as high as 78.0%, much higher than traditional one-pot nitrolysis protocols.