The effects of annealing a rapidly-quenched hydrogen-absorbing alloy with a stoichiometric ratio of 4.76 were investigated concerning its hydrogen-absorbing properties, crystal structure and electrochemical characteristics. Annealing at 1073K homogenized the alloy microstructure and flattened its plateau slope in the P–C isotherms. However, annealing at 1273K segregated a second phase rich in rare earth elements, increased the hydrogen-absorbing pressure and decreased the hydrogen-absorbing capacity. As the number of charge–discharge cycles increases, the particle size distribution of the rapidly-quenched alloy became broad due to partial pulverization. However, particle size distribution of the rapidly-quenched, annealed, alloy was sharp, since the annealing homogenized the microstructure, thereby improving the cycle characteristics. A high-capacity rectangular nickel metal hydride battery using a rapidly-quenched, annealed, surface-treated alloy for the negative electrode and an active material coated with cobalt compound containing sodium for the positive electrode was developed. The capacity of the resulting battery was 30% greater than that of a conventional battery.