An efficient leaching process was developed for nickel, cobalt, and the rare earth elements (REEs) from spent nickel metal hydride (NiMH) battery waste. The process involves dry chlorination with ammonium chloride in low temperature to produce water-soluble chlorinated compounds, followed by simple water leaching. The factors affecting the conversion and solubilization were studied, including the amount of ammonium chloride, residence time and temperature in dry chlorination, and solid to liquid ratio, time and temperature in water leaching. As a result, the dry chlorination process was found to produce ammonium and chloride containing products, depending on the temperature of the process: ammonium metal chlorides were produced in temperatures of 250-300 ℃, while increasing the temperature to 350 ℃ resulted in formation of metal chlorides. Overall, highest metal recoveries were achieved during 60 min residence time at a temperature of 350 °C, where ammonium is no longer present and ammonium metal chlorides and metal chlorides have formed. Water leaching was found to proceed rapidly, especially for REEs, and yields of 87% for Ni, 98% for Co, 94% for Ce, and 96% for La were attained during 60 min of leaching in room temperature. This study introduces a process, which is considered as an environmentally more benign alternative to traditional mineral acid leaching, resulting in high metal leaching efficiencies with neutral leachates, requiring no chemical-intensive neutralization steps in the following processing.