Currently, wire bonding is the most popular first-level inter-connection technology used between the die and package terminals, but because of its long-term and excessive usage, the mechanism of wire bonding has not been completely evaluated; therefore, fundamental research is still needed. In this chapter, the mechanism of microweld formation and breakage during Cu-Cu wire bonding was investigated using molecular dynamics simulation. The contact model for the nanoindentation process between the wire and substrate was developed to simulate the contact process of the Cu wire and Cu substrate. Elastic contact and plastic instability were investigated through the loading and unloading processes. Moreover, the evolution of the indentation morphology and distributions of the atomic stress were also investigated. It is shown that the loading and unloading curves do not coincide, and the unloading curve exhibits hysteresis. For the substrate, in the loading process the main force changes from attractive to repulsive. The maximum von Mises stress increases and shifts from the center towards the edge of the contact area. During the unloading process, the main force changes from repulsive to attractive. The Mises stress reduces first and then increases. Stress concentration occurs around dislocations in the middle area of the Cu wire.