This paper presents a facile method for decreasing the size of water dispersible Ni nanoparticles from 30 to 3 nm by the incorporation of a passivating surfactant combination of pluronic triblock copolymer and oleic acid into a wet chemical reduction synthesis. A detailed study revealed that the size of the Ni nanoparticles is not only critically governed by the concentration of the triblock copolymers but also dependent on the hydrophobic nature of the micelle core formed. The synthesized Ni nanoparticles were thoroughly characterized by means of transmission electron microscopy, x-ray diffraction, x-ray photoelectron spectroscopy and temperature and field dependent magnetic measurements, along with a comprehensive Fourier transform infrared spectroscopy analysis, in order to predict a possible mechanism of formation.