Capacity recovery after long term storage and loaded storage is a critical issue with the NiMH system since its inception. A measurable loss in capacity is observed when cells are stored for long periods of time or discharged deeply to zero volts. The different mechanisms that are known to cause self discharge and capacity loss after storage and loaded storage will be the focus of this paper. Capacity loss after long term storage involves two main events. One is self discharge which causes the open circuit voltage(OCV) of the cell to drop. Self discharge is caused by decomposition of NiOOH, migration of metal ions and possible degradation of separator. Self discharge can be prevented by using separators which are stable at high temperatures and pH and have good ion trapping capability. Various separator types and treatments can play an important role in inhibiting metal ions from migrating thus reducing self discharge. Self discharge during storage causes a severe suppression in the voltage of the foam positive electrode. This drop in voltage causes a breakdown of the cobalt conductive network in the nickel positive electrode. Reduction of high valence cobalt(III) which forms the electrode's conductive network takes place at these low voltages. A permanent breakdown in the conductive network results in low efficiency of the cell on consecutive charge and discharge cycles. In addition, the cobalt in its lower valence states can migrate away from the electrode into the separator causing shorts. These events effect the charge and discharge efficiency of these cells thereby resulting in capacity loss. Various mechanisms causing self discharge which affect capacity recovery after long term storage and loaded storage are discussed in this paper.