In this paper, novel application possibilities of CuO nanoparticles were investigated in SAC0307 solder alloy for composite soldering purposes. CuO nanoparticles in 0.25 and 0.5 wt% were mixed into the solder paste to produce composite solder joints. Solder joints were manufactured using standard surface mounting technology from different solder pastes. The solder joints were loaded in an 85 °C/85RH% temperature and humidity test for 4000 h. It was found that the CuO composite solder joints showed improved mechanical quality due to the microstructural refinement, which was studied using scanning electron microscopy (SEM) and focused ion beam (FIB) analysis. On the other hand, the corrosion resistance of CuO joints decreased, as they suffered localized corrosion extensively, which produced longer and more Sn whiskers on their surface than on the reference SAC0307. Density functional theory (DFT) calculations proved that CuO can bond to Sn, but CuO is not chemically inert in the solder bulk. CuO can start a cyclic reaction with the dispersed Cu6Sn5 intermetallics, which produces SnO2 in the solder bulk, ultimately enhancing corrosion. Therefore, CuO nanoparticles are suggested to be applied only in non-corrosive environments, such as space applications.