The interconnection mechanisms of a smart anisotropic conductive adhesive (ACA) during processing have been characterized. For an understanding of chemorheological mechanisms between the fluxing polymer and solder powder, a thermal analysis as well as solder wetting and coalescence experiments were conducted. The compatibility between the viscosity of the fluxing polymer and melting temperature of solder was characterized to optimize the processing cycle. A fluxing agent was also used to remove the oxide layer performed on the surface of the solder. Based on these chemorheological phenomena of the fluxing polymer and solder, an optimum polymer system and its processing cycle were designed for high performance and reliability in an electrical interconnection system. In the present research, a bonding mechanism of the smart ACA with a polymer spacer ball to control the gap between both substrates is newly proposed and investigated. The solder powder was used as a conductive material instead of polymer-based spherical conductive particles in a conventional anisotropic conductive film.