In this study, residual stress in Sn-3.0Ag-0.5Cu lead-free solder after annealing at varying temperature and duration was investigated by nanoindentation and uniaxial tensile experiments. Based on the unloading response of load-penetration depth, the contact stiffness was theoretically calculated and found to be decreased with increasing annealing duration especially at the annealing temperature of 210 degrees C. Additionally, the effect of residual stress on constitutive behaviour at strain rates of 1 x 10(-3) s(-1), 5 x 10(-4)s(-1) and 1 x 10(-4) s(-1) was consistently observed. By correlating residual stress and elastic indentation recovery, it was confirmed that greater contact stiffness is induced by greater compressive residual stress. Therefore, the optimal annealing condition of SAC305 solder is 210 degrees C for 12 h, which is believed to minimize the residual stress and stabilize the mechanical property of annealed solder.