There is some uncertainty concerning the role of iron deposits on the surface of nickel electrodes with respect to electrode activity during alkaline water electrolysis. Iron deposits variously have been reported to enhance nickel electrode activity by providing additional surface area from electrolytic deposition of solution phase iron species or to depassivate nickel electrodes via a surface interaction effect. In this study, nickel electrodes were sputtered with a smooth iron layer to determine the effect of metallic iron on the electrode surface without significantly changing the electrode surface area. A permeation cell with 8mol/L KOH at 70°C was used to follow nickel electrode potentials during hydrogen evolution while the permeation current was used to detect changes in the electrode structure. Short term measurements reveal no difference in behavior of coated and non-coated electrodes. Longer term results showed that a metallic iron coating on nickel electrodes prevented deactivation of the electrodes. The deactivation effect was associated with an increased hydrogen flux through the electrodes indicative of an elevated hydrogen concentration at the electrode surface. This high surface concentration is concluded to be the result of nickel hydride phase formation at the surface of the nickel electrodes. The iron coating prevents this surface phase from forming and hence prevents deactivation of the electrode.