Sharp indentation tests with a Berkovich indenter are utilized to investigate the influence of residual stress on the mechanical properties of Ni thin film subjected to plastic deformation. Based on the indention size effect, it is shown that residual stress has almost no influence on hardness in the elastic deformation stage while plastic deformation has a significant impact on the measurement of hardness. The elastic modulus and work hardening exponent are independent of elastic or plastic deformation and the evolution of yield strength follows the stress–strain curve of Ni thin film due to work hardening. Two analytical models are suggested in which the effect of residual strain on hardness and yield strength can be considered.