Reduction of an oxide in hydrogen is a method frequently employed in the preparation of active catalysts and electronic devices, Synchrotron-based time-resolved X-ray diffraction (XRD), X-ray absorption fine structure (NEXAFS/EXAFS), photoemission, and first-principles density-functional (DF) slab calculations were used to study the reaction of H-2 with nickel oxide. In experiments with a NiO(100) crystal and NiO powders, oxide reduction is observed at atmospheric pressures and elevated temperatures (250-350degreesC), but only after an induction period. The results of in situ time-resolved XRD and NEXAFS/EXAFS show a direct NiO-->Ni transformation without accumulation of any intermediate phase, During the induction period, surface defect sites are created that provide a high efficiency for the dissociation of H-2. A perfect NiO(100) surface, the most common face of nickel oxide, exhibits a negligible reactivity toward H-2. The presence of O vacancies leads to an increase in the adsorption energy of H-2 and substantially lowers the energy barrier associated with the cleavage of the H-H bond. At the same time, adsorbed hydrogen can induce the migration of O vacancies from the bulk to the surface of the oxide. A correlation is observed between the concentration of vacancies in the NiO lattice and the rate of oxide reduction, These results illustrate the complex role played by O vacancies in the mechanism for reduction of an oxide. The kinetic models frequently used to explain the existence of an induction time during the reduction process can be important, but a more relevant aspect is the initial production of active sites for the rapid dissociation of H-2.