Hydrothermal treatment of a slurry of badly crystalline (beta(bc)) nickel hydroxide at different temperatures (65-170 degrees C) results in the progressive ordering of the structure by the step-wise elimination of disorders. Interstratification is eliminated at 140 degrees C, while cation vacancies are eliminated at 170 degrees C. A small percentage of stacking faults continue to persist even in `crystalline' samples. Electrochemical investigations show that the crystalline nickel hydroxide has a very low (0.4 e/Ni) reversible charge storage capacity. An incidence of at least 15% stacking faults combined with cation vacancies is essential for nickel hydroxide to perform close to its theoretical (1 e/ Ni) discharge capacity. (c) 2005 The Electrochemical Society.