The aim of this study is to understand the effect of nickel addition on mechanical and wear properties of molybdenum and copper alloyed P/M steel. Specimens with three different nickel contents were pressed under 400 MPa and sintered at 1120 degrees C for 30 minutes then rapidly cooled. Microstructures and mechanical properties (bending strength, hardness and wear properties) of the sintered specimens were investigated in detail. Metallographical investigations showed that the microstructures of consolidated specimens consist of tempered martensite, bainite, retained austenite and pores. It is also reported that the amount of pores varies depending on the nickel concentration of the alloys. Hardness of the alloys increases with increasing nickel content. Specimens containing 2 % nickel showed minimum pore quantity and maximum wear resistance. The wear mechanism changed from abrasive wear at low nickel content to adhesive wear at higher nickel content.