The hydriding and electrochemical characteristics of Zr-based $AB_2$ alloy produced by gas atomization have been extensively examined. For the particle morphology of the as-cast and gas-atomized powders, it can be seen that the mechanically crushed powders are irregular, while the atomized powder particles are spherical. The increase of jet pressure of gas atomization process results in the decrease of hydrogen storage capacity and the slope of plateau pressure significantly increases. TEM and EDS studies showed the increase of jet pressure in the atomization process accelerated the phase separation within grain of the gas-atomized alloy, which brought about a poor hydrogenation property. However, the gas-atomized $AB_2$ alloy powders produced by jet pressure of 50 bar kept up the reversible $H_2$ storage capacity and discharge capacity similar to the mechanically crushed particles. In addition, the electrode of gas-atomized Zr-based $AB_2$ alloy of 50 bar showed improved cyclic stability over that of the cast and crushed particulate, which is attributed to the restriction of crack propagation by grain boundary and dislocation with ch/discharging cycling.