Nietzsche uses the term nihilism with at least two meanings:
Active Nihilism: As a sign of the growing power of the spirit.
Passive Nihilism: As decay and retreat of the power of the spirit.
In short, nihilism is defined according to the will of power. When this will diminishes or is exhausted, nihilism appears, since such will is nothing but the essence of life. According to Nietzsche's diagnosis, this kind of nihilism is about to come because all the values created by Western culture are false values because they are the negation of life itself. Then, when these illusory values collapse, nihilism will necessarily come.
Against this passive nihilism, Nietzsche reacts with active nihilism, which on the one hand, is a power of destruction that originates from the growing power of the spirit, (values will not fall on their own but are directly destroyed by the 'will to power', which denies them. On the other hand, it is a necessary condition for the will to power to create new values.
Nietzsche's critique of Western culture focuses on that he considers it a manifestation of this active nihilism that tries to advance passive nihilism and create a new civilization before the old one is definitively collapsed.