The gray mullet, Mugil cephalus is an inshore and bottom-feeding fish species of Oman sea. Therefore, the gray mullet may be more exposed to heavy metal contamination, as the toxic impacts of heavy metals mullet has been reported in various studies. This study was conducted to evaluate the toxic effects of the heavy metal, nickel (as NiCl2) on osmoregulation of the gray mullet by measuring blood biochemicals, hormones, minerals and gill histology. Fish (10 fish/tank) were experimentally exposed to NiCl2 at three environmentally relevant concentrations of 5, 10 and 15 µg/l for 96 h. Then, fish were challenged with seawater (35 mg/l) for a period of 120 min. The samples (blood and gill tissue) were collected After 96 exposure to NiCl2 and during salinity challenge (30, 60 and 120 min post challenge). The plasma levels of cortisol and glucose significantly increased in NiCl2-exposed fish. In addition, cortisol increased in all experimental groups 30 min after salinity challenge and then returned gradually to the same levels as the control at 120 min post salinity challenge (PSC). The triiodothyronine (T3) and thyroxine (T4) levels significantly decreased in response to 10 and 15 µg/l NiCl2. In all groups, the thyroid hormones significantly elevated at 30 min PSC. After 30 min PSC, T3 levels in all NiCl2-exposed fish and T4 in the treatment, 10 µg/l NiCl2 remained unchanged throughout the salinity challenge. In the treatment, 5 µg/l NiCl2, T4 levels were recovered at 120 min PSC and reached the same levels as the control. Exposure of fish to high concentrations of NiCl2 and salinity stress increased the lactate levels. However, lactate levels in 5 and 10 µg/l NiCl2 groups were recovered at 120 min PSC and reached the same levels as the control. Furthermore, plasma protein increased in response to 10 and 15 µg/l NiCl2. At 30 PSC, the protein levels decreased in control and 5 µg/l NiCl2 group, while it remained unchanged in fish exposed to 10 and 15 µg/l NiCl2 throughout the salinity challenge. Exposure of fish to NiCl2 disrupted the electrolyte (Na+, Cl-) balance both before and after salinity challenge, which may be due to gill lesions induced by the heavy metal and following alternations in gill permeability. However, fish in 5 µg/l NiCl2 re-established the ionic balance in the blood at the end of salinity challenge period. The malondialdehyde (MDA) levels significantly increased in response to 10 and 15 µg/l NiCl2. The MDA levels returned to the same levels as the control group at 120 min PSC. The results of the present study showed that nickel-induced toxicity (especially at high concentrations) can reduce the osmoregulation capabilities of mullet. However, fish are able to recover from the toxic effects over time, if contamination be eliminated.