Ultrasonic (US) wire bonding is a predominating interconnection technique in the microelectronic packaging industry. Despite its long-term usage and wide applications, the mechanisms, especially those of the friction and softening phases, are still unclear more than half a century after its invention. Targeting on reducing the big gap to a good understanding of the mechanisms, this dissertation focuses on the relative motions at the wire/substrate and wire/tool interfaces, and the oxide removal process. In addition, an energy flow model from the electrical input energy to the different energies involved in the mechanisms is developed and quantified.The relative motions at the two interfaces were investigated by a real-time observation system with which the micrometer-motions of the tool and the wire were captured. The motions were then tracked and quantified. In addition, the influences of the process parameters including the normal force, US power and process time were analyzed and the combined effect of the normal force and US power was emphasized. By a further investigation on the changes of the surface topography and elements distribution, it was proved that the relative displacement amplitudes at different locations of the wire/tool interface differ. With the substitution of the metal substrate by a transparent glass, the bonding process was visualized and different areas including the contact, friction, stick, microwelds and oxides areas were detected. The oxide removal process was studied with artificial coatings on either the wire or the substrate. A complete removal process including cracks, detachment, milling and transportation was studied. The transportation further includes penetration, oxide flow, pushing and metal splash. The quantification of energy flows shows that most US energy flows to the vibration induced friction at the two interfaces and the vibration induced formation, deformation and breakage of microwelds. Based on the energy flow to the wire/substrate interface and to the formation of microwelds, the optimal combination of the normal force and the ultrasonic power is determined.