A composite alloy composed of Mg2Ni and TiNi phases has been synthesized directly from elemental powders of Mg, Ni and Ti by mechanical alloying. The alloyed powders are produced by milling for 20 h. Most of the powders are not a perfect composite state but a mixture of Mg2Ni and TiNi grains. The amount of the Mg2Ni phase is relatively less than that of the TiNi phase because more Mg forms a solid-solution with TiNi than Ti forms with Mg2Ni. The maximum discharge capacity of the composite electrode is 380 mAh g(-1) at a discharge current density of 10 mA g(-1). This value is higher than that of a mechanically alloyed Mg2Ni electrode. The composite electrode shows improved cycle-life compared with single-phase Mg2Ni. For example, after 150 cycles the ratio of the discharge capacity to the maximum value is about 55% whilst the ratio for Mg2Ni is below 10%. The composite electrode also has a high-rate discharge capability which is about 100 mAh g(-1) after 40 cycles, regardless of the discharge current density.