It is demonstrated that iron nanoparticles function as a sorbent and a reductant for the sequestration of Ni(II) in water. A relatively high capacity of nickel removal is observed (0.13 g Ni/g Fe, or 4.43 mequiv Ni(II)/g), which is over 100% higher than the best inorganic sorbents available. High-resolution X-ray photoelectron spectroscopy (HR-XPS) confirms that the zerovalent iron nanoparticles have a core-shell structure and exhibit characteristics of both hydrous iron oxides (i.e., as a sorbent) and metallic iron (i.e., as a reductant). Ni(II) quickly forms a surface complex and is then reduced to metallic nickel on the nanoparticle surface. The dual properties of iron nanoparticles may offer efficient and unique solutions for the separation and transformation of metal ions and other environmental contaminants.