Failure modes of a V-containing and a V-free AB2 Laves phase-based metal hydride alloy were studied by the combination of X-ray diffractometer, scanning electron microscope, X-ray energy dispersive spectroscopy, inductively coupled plasma, Soxhlet extraction, and magnetic susceptibility measurement. Cells with the V-containing alloy exhibited less capacity degradation up until venting occurred in the cells, after which the capacity rapidly degraded. Cells with the V-free alloy remained linear in capacity degradation throughout the cycle life test. The failure mechanism for the V-containing alloy is related to the formation of an oxide layer that penetrates deeper into the alloy particles due to high V leaching and impedes gas recombination, while the failure mechanism for the V-free alloy is related to the continuous pulverization of the main AB2 phase.