Al-substituted Ni(OH)2 samples with Al3+/Ni2+ mole ratio of 0%, 10% and 20% have been prepared by a very facile chemical co-precipitation method. The microstructure of the prepared samples are analyzed by X-ray diffraction (XRD), Fourier transform infrared spectroscopy (FT-IR), thermo-gravimetric analysis (TGA), and Field emission scanning electron microscopy (FESEM). The results reveal that the pure Ni(OH)2 sample is β-Ni(OH)2 with nanosheets hierarchical structure; the sample with 10% Al is mixed phase α/β-Ni(OH)2 with hybrid nanosheets/nanoparticles hierarchical structure; the sample with 20% Al is α-Ni(OH)2 with irregular nanoparticles hierarchical structure. The lithium storage performances of the prepared samples are characterized by cyclic voltammograms (CV), electrochemical impedance spectroscopy (EIS), and charge–discharge tests. The results demonstrate that Al substitution could improve the lithium storage performances of nickel hydroxide. In particular, the mixed phase α/β-Ni(OH)2 with 10% Al exhibited the highest electrochemical activity, the best rate performance, and superior cycling stability. For example, after 30 charge/discharge cycles under a current density of 200 mA g−1, the mixed phase α/β-Ni(OH)2 with 10% Al can still deliver a specific discharge capacity of 964 mAh g−1, much higher than of for the α-Ni(OH)2 with 20% Al (681 mAh g−1) and the pure Ni(OH)2 (419 mAh g−1).