This study investigates the mechanism and effects of incorporating different ZrO₂ nano-particles into SAC0307 solder alloys. ZrO₂ nano-powder and nano-fibers in 0.25–0.5 wt% were added to the SAC0307 alloy to prepare composite solder joints by surface mount technology. The solder joints were shear tested before and after a 4000 h long 85 °C/85% RH corrosive reliability test. The incorporation of ZrO₂ nano-particles enhanced the initial shear force of the solder joint, but they decreased the corrosion resistance in the case of 0.5 wt%. SEM, EDS, and FIB analysis revealed intensive growth of SnO₂ on the solder joint surfaces, leading to the formation of Sn whiskers. Density functional theory (DFT) simulations showed that, despite Sn being able to bond to the surface of ZrO₂, the binding energy was weak, and the whole system was therefore unstable. It was also found that ZrO₂ nano-particles refined the microstructure of the solder joints. Decreased β-Sn grain size and more dispersed intermetallic compounds were observed. The microstructural refinement caused mechanical improvement of the ZrO₂ composite solder joints by dispersion strengthening but could also decrease their corrosion resistance. While ZrO₂ nano-particles improved the solder joint mechanical properties, their use is recommended only in non-corrosive environments, such as microelectronics for space applications.