This paper concentrates on the precipitation hardening of Al-(1 wt%)Cu thin films. It is shown that in contrast to bulk, the well-known approach of precipitation hardening in confined systems like thin layers and thin films does not operate in the conventional way. This work analyses and discusses the precipitate hardening and its relation to the precipitation mechanism of Al-(1 wt%)Cu thin films which are subjected to precipitation hardening, nano-indentation hardness measurements. Microfabricated Al-(1 wt%)Cu thin films were solution treated at 550 °C for 15 min, quenched and aged at 190 °C for various durations up to 48 h. Nano-indentation hardness measurements revealed for the first time an unexpected decrease in hardness at just ∼8 hours of aging, followed by a saturating increase. Microstructural analysis employing electron microscopy (high-resolution transmission, scanning, backscatter diffraction, energy dispersive spectroscopy) and x-ray diffraction revealed GP zones and θ precipitates but no θ’ in as-received films, and only θ precipitates for aging durations longer than 6 h in the precipitate hardened films. Through-thickness analyses of aged specimens highlighted that θ precipitates nucleate and grow essentially at grain boundary grooves and at the specimen surface as preferential nucleation sites, while depleting Cu from the grain interior. It is shown that the growing precipitation at the surface and grain boundary grooves depletes the Cu in the thin film interior explaining the weakening-hardening sequence observed in the hardness measurements. Hence, the work shows that precipitation kinetics, and not thermodynamics, determine the precipitation state in thin films.