Hydrogen reduction technique was used to form the nickel layer onto alumina powders in nickel sulfate solutions. The reduction rate and precipitation states of nickel ions were investigated at various experimental conditions such as hydrogen pressure, temperature, $PdCl_{2}$ addition, particle size, and so on. Uniformly nickel coated alumina composite powders were obtained at such condition as reduction temperature of $165^{circ}C$, hydrogen pressure of 300 psi, and $PdCl_{2}$ amount of $2;mg/ell$.