The MAGIC gamma-ray observatory has recently been upgraded by a second Cherenkov telescope at a distance of 85 m from the first one. Simultaneous observation of air showers with the two MAGIC telescopes (stereoscopic mode) will improve the reconstruction of the shower axis and solve the ambiguity in the impact point occurring in single-telescope mode. Also, the stereo observation will result in a better angular resolution, energy estimation and cosmic-ray background rejection. It is expected that the sensitivity of MAGIC improves significantly over the full energy range (60 GeV - 20 TeV). Here, we present the performance estimated from Monte Carlo simulations.