Sequential dissociation of hydrazine has been studied on Ni 4 cluster applying density functional theory (DFT) methods. Two routes of dissociation have been discussed. The first path (A) is the consecutive dissociation of four N-H bonds to form surface N 2 via intermediate product diimide, N 2 H 2. The second path (B) is the dissociation of N-N bond to form two NH 2 species leading to formation of surface ammonia. The second elementary steps for both the routes show the highest activation energy barrier; for example in path A, N 2 H 3 + H → N 2 H 2 + 2H, E Act is 1.19 eV and in path B, 2NH 2 → NH + H+NH 2 , E Act is 1.71 eV. These are the rate-determining steps. NBO analysis shows that adsorption of hydrazine and ammonia is due to strong delocalisation of the lone pairs to the higher energy states of the cluster. Adsorption and dissociation of hydrazine and ammonia are thermodynamically feasible at standard conditions. Formation of N 2 is a slow exothermic process, whereas N-N bond dissociation to form two NH 2 species is a faster and highly exothermic process. NH species binds by two Ni-N covalent bonds. N species binds the cluster by three Ni-N bonds and three strong lone pair delocalisation at threefold site. Removal of these intermediates needs higher energy of activation. Thus, the formation and dehydrogenation of ammonia are slow and lengthy processes. New catalysts could be designed in such a way that N-N bond might not be dissociated, which is happening due to absence of lone pair of N1(LP) to Rydberg orbital of N2(RY*) delocalisation or vice versa.