Nickel-doped yttrium aluminum garnet (Ni:YAG) has an optical absorption spectrum characteristic of Ni+3 located on octahedral sites with an absorption peak at 420 nm. When annealed in reducing atmospheres, the nickel converts to Ni+2 and the 420-nm absorption peak vanishes. Codoping with zirconium fixes the nickel into the Ni+2 state under all annealing conditions. Under these circumstances, some of the nickel is believed to enter the lattice on tetrahedral sites. The characteristic 320-nm defect emission is observed in all crystals.