The present invention provides a method for manufacturing high-purity hydrogen storage alloy Mg.sub.2Ni applicable to industry and capable of manufacturing continuously. First, raw materials of magnesium-nickel with weight percentage of nickel between 23.5 and 50.2 are heated, melt, and mixed uniformly. Cool the magnesium-nickel liquid and control the temperature to be above the solidification temperature and below the liquification temperature in the phase diagram of magnesium-nickel. By making advantage of segregation principle in phase diagrams, solid-state high-purity .gamma.-phase Mg.sub.2Ni hydrogen storage alloy is given. Then high-purity .gamma.-phase Mg.sub.2Ni hydrogen storage alloy with atomic ratio of 2:1, no other phases, and with excellent hydrogen absorption-desorption dynamics is given.