the present invention provides a method of producing a hydrogen storage alloy low in cobalt content which can restrains a decrease in cycle life characteristic and preservation characteristic of an alkaline storage battery when the alloy is used as a negative electrode . the method includes the following steps . an mm - ni system hydrogen storage alloy which has a crystal structure of cacu 5 and contains 15 atom % or less of cobalt is powdered to have an average particle diameter of 10 - 100 μm . then , the powdered alloy is immersed in a treatment solution at 80 °- 130 ° c ., the treatment solution comprising an alkaline aqueous solution containing 10 g / l or more of lithium hydroxide and having a specific gravity of 1 . 1 or higher , and cobalt ions which is contained in the alkaline aqueous solution , thereby forming a layer containing nickel and cobalt in higher concentration than in the bulk of the powdered alloy onto the alloy surface .