Nanoporous nickel hydroxide Ni(OH)2 coated on nickel foam by using a chemical bath deposition method shows a high specific capacitance of 2200Fg−1 at a discharging current density of 1Ag−1. After 500 charge–discharge cycles, the specific capacitance is stabilized at 1470Fg−1, and there is only a 5% fall in specific capacitance during the following 1500 cycles. The relationship between the capacitance decay and changes in the microstructure and morphology of nanoporous Ni(OH)2 is investigated. The results show that phase transformation and the growth of particle/crystal size, rather than the formerly proposed flaking off of Ni(OH)2, are the major factors contributing to the capacitance decay.