Mg-Ni multilayer films with sequential Mg and Ni layers were prepared by direct current magnetron sputtering. The substrate temperature influences the microstructure of the films greatly. The film deposited at 298K exhibits multilayered structure, while the film shows nanocrystalline/amorphous composite structure at the deposition temperature of 473 K. The optical properties between hydrogenation/dehydrogenation states of the films were performed using spectrophotometer in visible light region. The film deposited at 473K can switch from mirror-like metallic state towards brownish yellow transparent state under 0.6MPa H-2 at 298 K, and the optical transmittance modulation reaches up to 20% both at a wavelength of 770nm and IR region, while the film deposited at 298K exhibits low optical change, and the optical switching behavior can hardly be found. The extra free energy stored in the boundary of the nanocrystallines benefits the formation of magnesium-based hydride, resulting in the enhancement of the optical switching properties of the Mg-Ni film deposited at 473 K. (C) 2011 Elsevier B. V. All rights reserved.