Effects of Ni encapsulation on the electrochemical properties of a Ni-free alloy have been studied in this work. The encapsulation was by means of electroless nickel plating of the alloy powders either in an acidic or a basic solution. It was found that Ni encapsulation not only enhanced the discharge capacity, but also increased the activation rate. A NI-P encapsulated Ti,,Zr,;,Mn,Cr, alloy showed a discharge capacity of 175 mAh/g, which was 9 times better than that of the as-pulverized alloy (17 mAh/g). However, this discharge capacity was deteriorated by a heat treatment at 750 degreesC for 62 h. This damaging effect was resulted from Ni migration into the alloy matrix during heat treatment. SEM, EPMA and XRD results indicated that a complicated diffusive layer was formed around the particle surface with a crystal structure different from C14, which inhibited the charge-discharge reactions. The thickness of this diffusive layer increased with the temperature of heat treatment, and was more significant for the Ni layer coated in an acidic solution. (C) 2001 Published by Elsevier Science B.V.