The structural and electronic properties of Ce_1−xNi_xO_2−y nanosystems prepared by a reverse microemulsion method were characterized with synchrotron-based X-ray diffraction, X-ray absorption spectroscopy, Raman spectroscopy, and density functional calculations. The Ce_1−xNi_xO_2−y systems adopt a lattice with a fluorite-type structure with an acute local order where Ni displays a strongly distorted (oxygen) nearest-neighbor coordination and the presence of Ni atoms as first cation distances, pointing to the existence of Ni−O−Ni entities embedded into the ceria lattice. A Ni ↔ Ce exchange within the CeO₂ leads to a charge redistribution and the appearance of O vacancies. The Ni−O bonds in Ce_1−xNi_xO_2−y are more difficult to reduce than the bonds in pure NiO. The specific structural configuration of Ni inside the mixed-metal oxide leads to a unique catalyst with a high activity for the water gas shift (CO + H₂O → H₂ + CO₂) reaction and a simultaneous reduction of the methanation activity of nickel. Characterization results indicate that small particles of metallic Ni at the interface position of a ceria network may be the key for high WGS activity and that the formate−carbonate route is operative for the production of hydrogen.