Lead-free solder balls with a composition 95.5Sn-4.0Ag-0.5Cu (SAC) are examined both microstructurally and mechanically. The initial microstructure is investigated by electron microscopy using solder balls reflowed on Cu/Ni/Au metallization. Specially prepared single joint specimens with one solder ball, and flat samples of copper plates connected by SAC solder paste are loaded under monotonous shear and tension. Damaged samples are examined by electron microscopy, where a strong effect of microstructure on the crack path is observed. Deformation is observed to localize at the metallization/solder interface and also at the tin colony boundaries. Nano-indentation is used to get material data for different microstructural entities within the solder ball, with an emphasis on intermetallic compounds. Raw data from the indentation experiments are then used to predict yield strength and hardening parameters through an inverse approach, i.e. using a finite element simulation of the indentation process. Fatigue damage initiation and propagation in a solder bump are simulated by using interfacial debonding models. Damage is assumed to occur at interfaces modeled through cohesive zones in the material, placed at the internal boundaries where damage is found to localize experimentally. The degradation throughout the cycling process is accounted by an interfacial damage evolution law.