In the present work we investigate the adequacy of broken-symmetry unrestricted density functional theory for constructing the potential energy curve of nickel dimer and nickel hydride, as a model for larger bare and hydrogenated nickel cluster calculations. We use three hybrid functionals: the popular B3LYP, Becke's newest optimized functional Becke98, and the simple FSLYP functional ͑50% Hartree-Fock and 50% Slater exchange and LYP gradient-corrected correlation functional͒ with two basis sets: all-electron ͑AE͒ Wachtersϩ f basis set and Stuttgart RSC effective core potential ͑ECP͒ and basis set. We find that, overall, the best agreement with experiment, comparable to that of the high-level CASPT2, is obtained with B3LYP/AE, closely followed by Becke98/AE and Becke98/ECP. FSLYP/AE and B3LYP/ECP give slightly worse agreement with experiment, and FSLYP/ECP is the only method among the ones we studied that gives an unacceptably large error, underestimating the dissociation energy of Ni 2 by 28%, and being in the largest disagreement with the experiment and the other theoretical predictions. We also find that for Ni 2 , the spin projection for the broken-symmetry unrestricted singlet states changes the ordering of the states, but the splittings are less than 10 meV. All our calculations predict a ␦␦-hole ground state for Ni 2 and ␦-hole ground state for NiH. Upon spin projection of the singlet state of Ni 2 , almost all of our calculations: Becke98 and FSLYP both AE and ECP and B3LYP/AE predict 1 (d x 2 Ϫy 2