Ni powders prepared by mechanical milling under liquid nitrogen for 15 hr were sprayed using two stoichiometric ratios of the oxygen-fuel mixture in an effort to promote the formation of fine oxide phases. The oxide phases were introduced in an effort to improve mechanical properties and thermal stability of the coatings, via chemical reaction between oxygen and milled powders during flight and after impingement. The microstructure and properties of the milled powders and as-sprayed coatings were characterized by scanning electron microscopy, transmission electron microscopy and nanoindentation. The average grain size of the milled powders was 15.7 ± 5.1 run and ultrafine NiO and Ni3N particles with a size less than 5 run were distributed in the milled powders. These fine oxide and particles distributed in the powders were formed as a result of interaction between Ni, N from the milling slurry, and O from the surrounding environment under the energetic milling conditions. The coating microstructure was composed of nanocrystalline grains with an average grain size of 92.5 + 41.6 nm and extremely fine NiO particles of ~5 nm distributed homogeneously inside the grains. Ni3N phase was not found in the coating as it appears to have decomposed during HVOF thermal spraying. The coating sprayed with higher oxygen fraction in a hydrogen-oxygen mixture showed no significant increase in hardness and elastic modulus when compared to those of the coating sprayed with lower oxygen fraction in hydrogen-oxygen mixture. This was attributed to the small difference in the volume fraction of NiO particles between the coatings. These results indicate that new techniques of ultrafine dispersoid introduction in nanocrystalline coatings are potentially attractive as a means to improve the mechanical properties of the coating through reactive HVOF spraying.