Polarization of the nickel oxide (NiO) cathode limits the performance of the state-of-the-art MCFC. It is therefore important to clarify the phenomena which occur when, as is usually the case, the NiO cathode is formed in situ in the MCFC. This occurs by chemical or electrochemical reactions between nickel, which is the base material of the cathode, and molten carbonate (usually Li 2CO 3:K 2CO 3=62:38 mol%), which is the electrolyte. To clarify these formation phenomena, a direct observation method involving a telescope and CCD (charge coupled device) camera, in combination with potential measurements, is applied to the oxidation of a nickel sheet which is partially immersed in molten carbonate. In an atmosphere of pure CO 2, a partially immersed nickel sheet is relatively stable, as is a gold foil even in oxidant gas. In the case of nickel exposed to oxidant gas, however, the area exposed directly to the oxidant gas is rapidly covered by an electrolyte film, and undergoes intensive chemical or electrochemical reactions with CO 2 gas generation during oxidation and lithiation. As a consequence, a progressively rougher NiO surface develops over the entire sheet. After oxidation and lithiation, the non-immersed part of the sheet remains covered with electrolyte. Although the oxygen reduction current at the in situ lithiated NiO is over one order of magnitude higher than that at a gold electrode at the same applied potential, the extended meniscus region is the dominant reaction site for oxygen reduction. The same is true for the much more limited meniscus region of the gold electrode.