Magnesium nickel alloy (Mg2.35Ni) has been considered an excellent hydrogen storage medium because it has a. high hydrogen capacity, forms a very stable hydride, is inexpensive, and it presents no environmental hazards. One of the major problems associated with the use of Mg2.35Ni alloy for hydrogen storage is its initial activation for hydrogen uptake. Earlier work in this laboratory showed that treatment of Mg2.35Ni with either liquid water,or water vapor, activates the alloy for hydrogen up-take. In the present study, the surface modification of Mg2.35Ni by liquid water and water vapor is characterized. x-ray photoelectron spectroscopy, and transmission electron microscopy suggest the presence of Mg(OH)(2) on the surface. It is believed that this is the first report showing the presence of hydroxides on the surface of an active hydrogen storage alloy.