The mechanism of the hydrated nickel hydroxide electrode, used in the nickel cadmium battery, is a matter of considerable controversy. Potential sweep experiments were performed on film nickel hydroxide electrodes in an effort to determine the oxidation‐reduction mechanism. The existence of more than one reduced structure was confirmed and the structure known as α‐nickel hydroxide was studied in detail. A model based on a reversible charge transfer step with a rate‐controlling diffusion process was used to analyze the data. The results were in good agreement with the model. The over‐all reaction for α‐nickel hydroxide was found to be The rate‐controlling process, which was assumed to be proton diffusion, was found to have a diffusion coefficient of approximately 2 × 10−9 cm2 sec−. Evidence for the formation of a poorly conducting layer during discharge of the electrode was found and capacity loss was attributed to this.