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Abstract: A Ni–ScSZ cermet is widely used as the anode in a solid oxide fuel cell because it possesses the appropriate electrochemical properties. However, it is susceptible to degradation during operation. Samples of a NiO–ScSZ composite were reduced in pure and diluted hydrogen to determine the microstructural evolution and the degradation behavior of the material. The resulting changes in microstructure were investigated using scanning transmission electron microscopy, X-ray energy dispersive spectroscopy and electron energy loss spectroscopy. The resulting data revealed that the various conditions during the reduction processes had a significant effect on the microstructures. The high porosity of the reduced nickel phase and cracking between the Ni and the ZrO2 phases after reduction resulted in a reduction in the strength of the anode material. [Copyright &y& Elsevier]