Previous studies of nickel hydroxide (Ni(OH)2) powders have shown that either heating or mechanical grinding can result in complete de-hydroxylation, leading to conversion to nickel oxide (NiO). In both cases, this process appears to occur in one stage, without evidence for any intermediate compounds being formed. During studies of Ni(OH)2 powders for applications in the positive electrodes of Ni metal hydride (NiMH) rechargeable batteries, using transmission electron microscopy (TEM), we have observed significant changes caused by exposure to the highly energetic electron beam used for imaging and analysis. It is shown here, using electron energy-loss spectroscopy (EELS), that de-hydroxylation under electron irradiation occurs in two stages, with nickel oxy-hydroxide (NiOOH) being formed at the intermediate stage.