Nanocrystalline nickel deposits have been prepared using electrodeposition in nickel sulphate based baths. The samples were characterised using microhardness testing, X-ray diffraction (XRD) and transmission electron microscopy (TEM). As-deposited samples showed a narrow grain size distribution with an average grain size of less than 20nm. The greatly increased microhardness of nanocrystalline materials, similar to 500kg/mm(2) for the Ni samples in this study, and their other superior properties have many potential applications. However, the microstructure of nanocrystals is metastable, and grain growth occuring at elevated temperatures can lead to a deterioration of properties. In this work, we have studied grain growth in nanocrystalline Ni annealed at 250degreesC. TEM micrographs revealed that the type of growth is abnormal. 3D atom probe analysis gave no indication of gain boundary segregation in as-deposited materials, and the low levels of segregation found in material annealed for 60 minutes were clearly not sufficient to significantly inhibit grain growth. Upon annealing, an increase in hardness up to about 580kg/mm(2) occurred within the first 5 minutes. Despite fast abnormal grain growth inside the nanocrystalline Ni, the high hardness values were maintained for a surprisingly long time. Only after about 240 minutes when the volume fraction of abnormal grains was above 50%, did the hardness start to decrease significantly. A two-phase model is proposed to relate the hardness data to the observed microstructure.