Role of O2 gaseous impurities on hydrogenation behavior of Zr(V0.95Ni0.05)2 is evaluated. O2 deteriorates hydrogenation performance of Zr(V0.95Ni0.05)2 by forming passivation layer. Zr(V0.95Ni0.05)2 almost loses the entire absorption capacity as O2 content reaches 2 vol%. Both capacity and kinetics can be mostly re-obtained in the regenerated alloy.