In this work, the strain gradient formulation is used within the context of the thermodynamic principle, internal state variables, and thermodynamic and dissipation potentials. These in turn provide balance of momentum, boundary conditions, yield condition and flow rule, and free energy and dissipative energies. This new formulation contributes to the following important related issues: (i) the effects of interface energy that are incorporated into the formulation to address various boundary conditions, strengthening and formation of the boundary layers, (ii) nonlocal temperature effects that are crucial, for instance, for simulating the behavior of high speed machining for metallic materials using the strain gradient plasticity models, (iii) a new form of the nonlocal flow rule, (iv) physical bases of the length scale parameter and its identification using nano-indentation experiments and (v) a wide range of applications of the theory. Applications to thin films on thick substrates for various loading conditions and torsion of thin wires are investigated here along with the appropriate length scale effect on the behavior of these structures. Numerical issues of the theory are discussed and results are obtained using Matlab and Mathematica for the nonlinear ordinary differential equations (NODE) which constitute the boundary value problem. This study reveals that the micro-stress term has an important effect on the development of the boundary layers and hardening of the material at both hard and soft interface boundary conditions in thin films. The interface boundary conditions are described by the interfacial length scale and interfacial strength parameters. These parameters are important to control the size effect and hardening of the material. For more complex geometries the generalized form of the boundary value problem using the nonlocal finite element formulation is required to address the problems involved.