The mechanism of transformation of nanocrystalline Ni into its polycrystalline structure is not well understood. The transformation of texture and microstructure is investigated in this paper by X-ray diffraction measurements and also more directly by orientation imaging microscopy (OIM). The microstructure after systematic annealing was recorded using the OIM and it was found that the final annealing texture depended on the initial texture. The factors controlling annealing texture in nanocrystalline Ni are annealing temperature, time and heating rate. It is clear, however, that this grain growth is accompanied by strengthening of the <111>//ND texture. The competition in growth between (I 11) and (100) grains is followed during the annealing treatment up to 400 degreesC. It is also demonstrated that the microstructure obtained after annealing had a higher fraction of special grain boundaries (Sigma3 in the coincidence site lattice). It is possible to use the formation of coherent twin boundaries to explain the mechanism of texture evolution and growth of (111)-fibre grains.