Ce–Ni base alloy CeNi₅ is often used as the hydrogen storage alloy in Ni–H batteries. Its application is more or less limited by the high cost in the traditional preparing process. Therefore, lots of researchers have paid more attention to develop a novel process with high production efficiency and low cost. The goal of the present research was to demonstrate the technical viability of a new process (solid–oxygen–ion conducting membrane process, i.e., SOM process) for the production of  CeNi₅ alloy directly from its oxide precursors. This process was improved on the basis of FFC process (Fray–Farthing–Chen Cambridge process): (1) the preparation of cathode was he same as that in FFC process, (2) Cu (oSn) liquid saturated with carbon was used as anode separated from the melt ba yttria–stabilized zirconia tube in which only oxygen–ion was permeated to prevent the side reactions and decomposition of molten salts taking place until a voltage as high as 3.5 V. This paper was focused on the preparation of hydrogen storage alloy CeNi₅ by SOM process, some parameters such as molten salt temperature, electrolytic time, configurations and phase compositions of products were investigated. The results show that NiO–CeO₂ pellets can be completely reduced to CeNi₅ alloy by  SOM process. The analysis of phase compositions of intermediate products indicates that the reduction of NiO–CeO₂ starts from NiO, it reduces firstly into Ni, then reacts with newly–formed CeOCl and finally forms CeNi₅. The comparison of FFC and SOM processes shows that for SOM, NiO–CeO₂ pellet (2.5 g) can be completely reuced to CeNi₅ after electrolyzed for 3 h, and the current efficiency is 75.5%, the electrolysis energy consumption is only as low as 4.03 kW·h/kg; while for FFC, it takes 12 h for the same pellet to be reduced to pure CeNi₅, and the current efficiency is 26.1% but the electrolysis energy consumption is 10.27 kW·h/kg. It could be concluded that SOM process has a bight future for industrial application.