Cyclic stress–strain response of an equal channel angularly pressed Sn-3.8Ag-0.7Cu alloy was investigated to seek a mechanistic understanding of cyclic softening in Sn-rich alloys. The equal channel angular pressing (ECAP) was applied to modify the microstructure of the solder alloy by breaking up the needlelike Ag3Sn intermetallic phase into fine granules and by reducing the large β-Sn dendrites into smaller and equiaxed grains. The extruded alloys were subjected to strain-controlled fatigue test at various strain amplitudes. It was found that the extruded alloy exhibited a sharp decrease of the stress amplitude within the initial few cycles compared with the as-cast alloy. After only a few cycles, the alloy suffered from noticeable surface damage. In situ scanning electron microscopy observations of the cyclic bending specimens revealed an approximately logarithmic relationship between crack density and the number of cycles. A theoretical model of microcrack accumulation was constructed to explain the rapid cyclic softening behavior. The predicted results, based on the model, agreed well with the experimental data and indicated that the rapid softening had resulted from an increased tendency for grain boundary cracking in the ECAPed microstructure due to the increase in the grain boundary area per unit volume and the reduced resistance of Ag3Sn to grain boundary sliding.