This article reports a nanomechanical response study of the contact-induced deformation behavior in Al0.16Ga0.84N thin film by means of a combination of nanoindentation and the cross-sectional transmission electron microscopy (XTEM) techniques. Al0.16Ga0.84N thin film is deposited by using the metal-organic chemical vapor deposition method. Hardness and Young’s modulus of the Al0.16Ga0.84N films were measured by a Berkovich nanoindenter operated with the continuous contact stiffness measurements mode. The obtained values of the hardness and Young’s modulus are 19.76±0.15 and 310.63±9.41 GPa, respectively. The XTEM images taken in the vicinity just underneath the indenter tip revealed that the multiple “pop-ins” observed in the load-displacement curve during loading are due primarily to the activities of dislocation nucleation and propagation. The absence of discontinuities in the unloading segments of the load-displacement curve suggests that no pressure-induced phase transition was involved.