In situ atomic force microscopy images of nickel hydrous oxide films electrodeposited on the basal plane of highly oriented pyrolytic graphite in alkaline electrolytes have shown that a stepwise oxidation leads to irreversible formation of wide crevices throughout the material. Upon subsequent stepwise reduction, the gaps close leaving a hairline type crack which follows the profile of the crevice. These potential induced structural rearrangements have been attributed to stresses induced by differences in the densities of the nickel hydrous oxide in the two oxidation states.