Abstract: Effect of minim amount rare earth Er on microstructure and performance has been systematically investigated for a Sn3.8Ag0.7Cu lead-free solder alloy. It is found that the addition of minim amount Er in the Sn3.8Ag0.7Cu solder leads to slight decrease in melting temperature, increase in spreading area and shear strength. Through observation of microstructure, the area fraction of eutectics is increased and the size of prime intermetallic compounds(IMC)is decreased due to the effect adding Er.The thickness of IMC layer between solder and substrate Cu is restrained in the aging process, and the restraint is especially evident after aging of 400 h. This will be helpful for the reliability of soldered joint.The results indicates that the SnAgCuEr alloy with minim amount rare earth is lead-free solder alloy with excellent performance.