Nickel hydroxide powder was modified by immersing the mixture of nickel hydroxide powder with cobalt compounds in an alkali solution or by chemical deposition. Electrochemical properties of the pasted nickel electrodes consisting of surface modified Ni(OH)2 powder in a porous nickel substrate were studied. The results show that the active material utilization of the modified nickel electrodes greatly increases due to the uniform distribution of a Co(OH)2 layer on the surface of the nickel hydroxide powder resulting in the improvement of the electrochemical activity and conductivity. The EIS results show that the Co(OH)2 layer decreases the charge-transfer resistance and increases the active surface area of the nickel electrode.