This study investigated the effects of cobalt microalloying addition on the microstructural features, thermal characteristics and mechanical behavior of eutectic Sn–0.7wt%Cu lead-free solder alloys. The results show that minor cobalt addition of ~ 0.05 wt% causes significant grain refinement of β-Sn, facilitates the formation of fine fibers (Cu,Co)6Sn5 phases and preventing the formation of η′-Cu6Sn5 phases, whereas a large amount of Co (~ 0.5 wt%) additions accumulated in the (Cu,Co)6Sn5 IMCs and clearly changed into coarse fibers. The precipitation strengthening mechanisms of fine fibers (Cu,Co)6Sn5 in the β-Sn matrix increased the ultimate tensile strength (UTS) and Young’s modulus (Y) of the alloy from 30.5 MPa and 15 GPa to 44.6 MPa and 22.3 GPa, respectively, but the ductility decreased from 60 to 45.7%. The coarse fibers (Cu,Co)6Sn5 in eutectic alloys is of interest from not only increased UTS and Y to 38.7 MPa and 16.3 GPa but also maintaining the ductility at the same level, allowing for unique microstructure design. Furthermore, 0.05wt% of Co significantly reduce the onset, eutectic temperatures and undercooling, although pasty rang has been slightly raised, which may enhance the thermal characteristics. This presumably has important implications for the reliability of solders as well as their performance in electronic service.