The role of strain on the thermal stability of NiSi has been studied by deposition and annealing of Ni on strained and relaxed Si(100) n-type substrates. Strained Si substrates have been produced by depositing a pseudomorphic silicon film on top of a 3000 Å thick relaxed Si0.8Ge0.2 film. Raman spectroscopy has proved the top silicon film to be strained. The presence of the characteristic hatch-cross pattern has been confirmed by Atomic Force Microscopy (AFM). Scanning electron microscopy (SEM) and Photoelectron emission microscopy (PEEM) show that the islanding of the NiSi film appears at lower temperature on the bulk silicon substrate (600°C) than on the strained silicon substrate (700°C). The improved thermal stability of NiSi on strained Si can be explained by the difference in relative interface energy of NiSi on strained and relaxed silicon. The thermal expansion coefficient of Ni being 3 times larger than that of Si, NiSi is in compression on Si at 500°C already. The correlation of this compression state with the lattice parameters of bulk and strained Si (100) produces an increased NiSi islanding probability on bulk Si (100) with respect to strained Si.