Spherical nickel hydroxide microencapsulated by cobalt has been used as the electrochemically active material in pasted-type nickel electrodes of rechargeable alkaline batteries. Cobalt coating on the surface of nickel hydroxide particles can be converted to CoOOH during charge. Well distributed CoOOH forms the conductive network on the surface of nickel hydroxide particles, thereby leading to higher utilization of active material. Cyclic voltammetric studies suggest that nickel hydroxide microencapsulated by cobalt has better reversibility of the Ni(OH)(2)/NiOOH redox couple, greater discharge capacity and higher oxygen evolution overpotential than nickel hydroxide with added cobalt metal powder as a conductor. The mechanism of the electrode reaction is still found to be controlled by proton diffusion, and the proton diffusion coefficient is 1.2 x 10(-9) cm(2) s(-1).