The unstable compound {CpNiCH3} is formed in the reaction of nickelocene with methyllithium. This compound reacts with acetylenes to give thermolabile complexes of the type CpNiMe(eta-2-RC=CR) 1 (R = Me, C6H5, SiMe3). Complex 1 can react to give either: (I) the dinickel compound (CpNi)2(RC=CR) 2, or (II) the labile compound {CpNi-(R)C=C(R)-CH3} 3, which is formed by insertion of the alkyne. For R = Me, further complexation and insertion reactions followed by eta-H elimination give the new stable eta-3-allylNiCp compound 5, the structure of which was determined by H-1 and C-13 NMR spectroscopy. When R = C6H5, eta-H elimination is hindered for steric reasons and polymerization of diphenylacetylene occurs. For R = SiMe3 steric hindrance makes coordination of the second RC=CR molecule to 3 impossible, preventing oligomerization of bis(trimethylsilyl)acetylene from occurring. gamma-H elimination and further rearrangements of 3 give the eta-3-allyl-nickel compound 6. The mechanisms of reaction of {CpNiCH3} with acetylenes are discussed.