On 25 January 1977, Nicholls suffered a stroke and was admitted to the cardiac ward at Royal Adelaide Hospital. He had a history of high blood pressure and had suffered a mild heart attack some years earlier. He was not discharged until three weeks later, with Lieutenant-Governor Walter Crocker serving as Administrator of the Government in his place. Nicholls attended only one further official engagement after his stroke, hosting Queen Elizabeth II at Government House on 20 March. She subsequently awarded him a second knighthood, Knight Commander of the Royal Victorian Order (KCVO). Nicholls' retirement due to ill health was announced on 22 April, with effect from 30 April. He held office for only 150 days, making him the shortest-serving governor in South Australian history and the only governor to serve for less than a year.