Nanocrystalline Mg2Ni-type hydrogen storage alloys were synthesized using the powder metallurgical technique and mechanical milling with nickel powder under an argon atmosphere. Changes in phase structures with mechanical treatment were studied by X-ray diffraction (XRD) and transmission electron microscopy (TEM) with selected-area electron diffraction (SED). As expected, the phase structure of the synthesized material changes with milling time, from crystallite to nanocrystallite and amorphous. The electrochemical behavior of these materials with various phase structures in alkaline media, such as electrochemical capacity, high rate dischargeability and cycle life, were investigated and compared. The Mg2Ni type alloy electrode with nanocrystalline structure showed superior discharge characteristics compared with those with crystallite and amorphous structure. It was also found that the electrochemical hydriding/dehydriding behavior of Mg2Ni-type hydrogen storage alloys has been further improved by a new approach of particle inlay developed in this study. The analysis of the electrochemical impedance spectroscopy (EIS) reveals that for the nanocrystalline Mg2Ni type alloy electrode, both the charge transfer resistance of the hydrogen redox reaction on the surface and the diffusion resistance of the hydrogen atom in the bulk alloy were greatly reduced by mechanical treatment with nickel addition. The rate-determining step of the electrode reaction changed with the electrode nanocrystalline structure.