Nanoindentation studies of thin metal films have provided insight into the mechanisms of plasticity in small volumes, showing a strong dependence on the film thickness and grain size. It has been previously shown that an increased dislocation density can be manifested as an increase in the hardness or flow resistance of a material, as described by the Taylor relation . However, when the indentation is confined to very small displacements, the observation can be quite the opposite; an elevated dislocation density can provide an easy mechanism for plasticity at relatively small loads, as contrasted with observations of near-theoretical shear stresses required to initiate dislocation activity in low-dislocation density materials. Experimental observations of the evolution of hardness with displacement show initially soft behavior in small-grained films and initially hard behavior in large-grained films. Furthermore, the small-grained films show immediate hardening, while the large grained films show the ‘softening’ indentation size effect (ISE) associated with strain gradient plasticity. Rationale for such behavior has been based on the availability of dislocation sources at the grain boundary for initiating plasticity. Embedded atom method (EAM) simulations of the initial stages of indentation substantiate this theory; the indentation response varies as expected when the proximity of the indenter to a Σ79 grain boundary is varied.