Nickel/Nickel Oxide (Ni/NiO) nanocrystalline powders have been synthesized by ball milling, followed by heat treatment in the temperature range 300-800 C in air. The oxidation behavior has been studied through structural and electrical property measurements. These results have been substantiated with magnetization data. It is shown that a magnetic transition is triggered by metal-insulator interface due to the existence of core (Ni) and shell (NiO). Further, there is an evidence of correlation between the magnetic and electrical properties. © 2008 American Institute of Physics.