The Mg-Ni alloy was prepared by mechanical alloying. XRD and TEM analysis were used to indentify the microstructure and the phase of the Mg-Ni composite during the milling process, the thermodynamic properties of nanocrystalline Mg-Ni alloy were measured The results show that the alloy powder can be prepared by mechanical alloying on the condition that the milling technological parameters were strictly controled, The particle sizes of the powder were between 10 nm and 20 nm. At P-C isotherms there existed good plateau curves with long-width plateau.The nanocrystalline Mg-Ni alloy had a hystersis effect during hydrogen absorption/desorption and the effect decreased with the increase of temperature. The nanocrystalline Mg-Ni alloy has satisfied properties of hydrogen storage and a promising value of engineering application.