This paper investigates the effects of small amount nickel addition (0, 200, 400, 800, 1800 ppm) on the microstructure and the mechanical properties of Sn-0.7Cu lead-free solder alloys. It is known that even ppm level Ni additions have significant effects on the microstructure of Sn-Cu solder alloys. Ni suppresses the growth of β-Sn dendrites in favour of eutectic formation. As the nickel content increases, the microstructure undergoes a morphological evolution from hypoeutectic through fully eutectic to hypereutectic. Along with these transformations, the mechanical properties of the alloy also significantly change. Based on the experimental results presented in this paper, the Sn-0.7Cu solder achieves maximum strength at the addition level of 800 ppm Ni, when the microstructure becomes fully eutectic.