LaNi4.27Sn0.24 alloy was mieroencapsulated with cobalt by electroless deposition from an alkaline hypophosphite bath. Discharge curves of the encapsulated alloy indicate an additional contribution to the capacity arising from the cobalt on the surface. Studies on cobalt thin films reveal the presence of adsorbed hydrogen in cobalt. The amount of hydrogen adsorbed was observed to increase with time of cathodic polarization and to reach a maximum. Polarization techniques have been used to characterize the cobalt-plated alloy as a function of state of charge. The equilibrium potential of the microencapsulated electrode at low hydrogen concentration is determined by the potential of the cobalt coating on the surface.