The Yb/Co coated nickel hydroxides were prepared by precipitation of Yb(OH)3 on the surface of spherical nickel hydroxide, followed by precipitation of Co(OH)2 on its surface. The optimum coating content of ytterbium was around 2% (atomic concentration) to obtain high discharge capacity at 60°C. It was shown that the discharge capacity of nickel hydroxide at high temperatures was improved by coating of ytterbium and cobalt hydroxide. The high temperature performances of the sealed AAA-sized Ni–MH batteries using Yb/Co coated nickel hydroxide as positive electrodes were carried out, showing much better than those using the un-coated and only Co(OH)2 coated nickel hydroxide electrodes. The charge acceptance of the battery using 2% Yb and 2% Co coated nickel hydroxide reached 92% at 60°C, where the charge acceptances for the un-coated and only cobalt coated ones were only 42 and 46%, respectively. It has shown that the Yb/Co coating is an effective way to improve the high temperature performance of nickel hydroxide for nickel–metal hydride batteries.