Palladium chloride (PdCl2), which is generally used as an activating agent for electroless nickel coating, is expensive and hence increases the coating cost. In the present study, AgNO3, which is much cheaper than PdCl2, was used as an activating agent for electroless Ni coating on yttria stabilised zirconia (YSZ) powder to fabricate Ni-YSZ cermet anodes for solid oxide fuel cell. The YSZ powder was coated with 30 and 40 wt-%Ni using both AgNO3 and PdCl2 as activating agents. The powders activated with AgNO3 showed the same coating characteristics as the powders activated with PdCl2 in terms of amount of Ni deposited, coating quality, uniformity and microstructure. The coated powder was pressed and sintered in air and reduced in hydrogen atmosphere to convert NiO back to Ni. The sintered microstructure showed a well defined network of Ni around YSZ particles, which is necessary for the effective functioning of the anode. © 2011 Institute of Materials, Minerals and Mining.