Pd deposition on the electrode has been tried during charge cycles into improve the degradation of Mg2Ni electrodes. PdCl2 was added to 6 M KOH and 1 M LiOH, and the modified electrolyte contained Pd ranging from 0.00045 to 0.0006 M. The Pd ions were deposited continuously during the charge step with no additional treatment. The ionic conductivity of the modified electrolyte and the hydrogen diffusivity of the Pd-deposited Mg2Ni electrode were measured, and the surface of the electrode in the modified electrolyte was examined. The ionic conductivity of the modified electrolyte was similar to that of the original electrolyte, and the deposited Pd layer did not affect the hydrogen diffusion. The formation of a passive Mg(OH)(2) layer was retarded effectively, and this enhanced the cyclic stability and rate capability of the nanocrystalline Mg2Ni electrode in the Pd-added electrolyte. (C) 2003 The Electrochemical Society.