This research focuses on the characterization of the structure and mechanical behavior of metal nanowires. Molecular dynamics simulations with embedded-atom method (EAM) potentials are used. A novel shape memory effect and pseudoelastic behavior of single-crystalline FCC metal (Cu, Ni, and Au) nanowires are discovered. Specifically, upon tensile loading and unloading, these wires can recover elongations of up to 50%, well beyond the recoverable strains of 5-8% typical for most bulk shape memory alloys. This novel behavior arises from a reversible lattice reorientation driven by the high surface-stress-induced internal stresses at the nanoscale. It exists over a wide range of temperature and is associated with response times on the order of nanoseconds, making the nanowires attractive functional components for a new generation of biosensors, transducers, and interconnects in nano-electromechanical systems. It is found that this novel shape memory behavior only exists at the nanometer scale but not in bulk metals. The reason is that only at the nanoscale is the surface-stress-induced driving force large enough to initiate the transformation. The lattice reorientation process is also temperature-dependent because thermal energy facilitates the overcoming of the energy barrier for the transformation. Therefore, nanowires show either pseudoelasticity or shape memory effect depending on whether the transformation is induced by unloading or heating. It is also found that not all FCC nanowires show shape memory behavior. Only FCC metals with higher tendency for twinning (such as Cu, Au, Ni) show the shape memory because twinning leads to the reversible lattice reorientation. On the other hand, FCC metals with low likelihood of twinning (such as Al) do not show shape memory because these wires deforms via crystal slip, which leads to irreversible deformation. A micromechanical continuum model is developed to characterize the shape memory behavior observed. This model treats the lattice reorientation process as a smooth transition between a series of phase-equilibrium states superimposed with a dissipative twin boundary propagation process. This model captures the major characteristics of the unique behavior due to lattice reorientation and accounts for the size and temperature effects, yielding results in excellent agreement with the results of molecular dynamics simulations.