For the first time, a nano Ni decorated Mg ultrafine powder, Mg@Ni nano-composite powder, was prepared through arc plasma evaporation of pure Mg followed by the electroless plating of Ni on the Mg ultrafine particles in a NiCl2 solution. The phase components, microstructure and hydrogen sorption properties of the Mg@Ni composite powder were carefully investigated. It is observed that the composite is mainly composed of ultrafine Mg particles decorated by nano Ni grains introduced during electroless plating. Based on the Pressure-Composition-Temperature measurements, the hydrogenation enthalpy of the Mg@Ni composite is determined to be -73.6 kJ/mol H-2, close to that of pure Mg. Meantime, the hydrogen absorption kinetics can be improved and the hydrogen desorption temperature of the hydrogenated Mg Ni nano-composite can be reduced as compared to those of the pure Mg ultrafine powder. The improved hydrogen sorption properties can be mainly attributed to the gateway effects from the Mg2Ni/Mg2NiH4 phases formed on Mg/MgH2 ultrafine particles after re-/dehydrogenation cycles. The results showed that through arc plasma method followed by electroless plating of transition metals, the hydrogen storage properties of Mg ultrafine powders can be effectively improved. Copyright (C) 2014, Hydrogen Energy Publications, LLC. Published by Elsevier Ltd. All rights reserved.