The internal reduction of Ni2+ ions dissolved in 10YSZ (10 percent by mole Y2O3- stabilized ZrO2) was studied using magnetometry. Chemical methods were used to produce specimens with varying amounts of NiO (0.01–11.8% by mol), below and above the solubility limit of NiO in 10YSZ. The solubility limit was determined using x-ray diffraction measurements in which the change in lattice parameter was correlated to the amount of Ni2+ ions in solution. Vibrating sample magnetometry (VSM) was used to unequivocally establish that NiO does not exist as a second phase for specimen compositions less than or equal to 0.5 m/o NiO. Specimens with compositions 0.5, 0.1, and 0.01 m/o NiO in YSZ were then prepared and heat treated in Ar – 2% H2 at 1273 K for times ranging from 1 to 20 h. The ferromagnetic response of the reduced specimens was measured using SQUID magnetometry at 100 K to quantify the amount of Ni metal formed as a function of time. SQUID magnetometry measurements of the same specimens were performed at 5 K where the paramagnetic response may be used to quantify the decrease of Ni2+ ions during reduction. The two SQUID measurements agree well and revealed parabolic growth law kinetics. Transmission electron microscopy revealed that internal reduction in these specimens proceeds by the formation of Ni0 along the YSZ grain boundaries. The results indicate that there are two stages of internal reduction in polycrystalline NiO-containing YSZ. For short times, precipitation of Ni occurs at grain-boundary regions, and for longer times, it occurs inside the grains.