Solid oxide fuel cells (SOFCs) based on BaCe0.8Gd0.2O3 (BCG) electrolyte films are constructed and tested at intermediate temperatures (700 to 800 degrees C) using hydrogen as fuel and air as oxidant. The ionic and electronic conductivities as well as the interfacial properties of the BCG electrolyte films, as deposited on Ni-BCG substrates, are also determined from impedance and open-cell voltage measurements. Results indicate that the performance of the fuel cells is very sensitive to materials selection and to processing. Diffusion of Ni from substrates into the BCG electrolyte films during processing increases not only the bulk and interfacial resistances but also the electronic transference numbers of the electrolyte films, resulting in reduced open-cell voltages and poor power output. The performance of solid oxide fuel cells based on BCG electrolyte films may be substantially improved, however. by avoiding Ni diffusion into BCG electrolyte through proper selection of materials and modifications in processing.