While it is widely known that nanowires show strong size dependence on their elastic modulus and yield strength, the study on the asymmetric tensile and compressive yield strengths is scarce. In particular, the effect of the surface stress needs to be clearly revealed. In this paper, a theoretical framework is proposed to study the effect of surface stress on the elastic property and yield strength of nanowires. Both the surface residual stress and surface elasticity are taken into account, and the constraint of surface stress in the transverse direction is incorporated. For a representative aluminum nanowire with the decrease in the nanowire radius, the surface elasticity causes both the Young's modulus and Poisson's ratio to increase, and the surface stress causes the tensile yield strength to increase and the magnitude of compressive yield strength to decrease, leading to tension-compression asymmetry. The effect of surface elasticity is relatively small whereas the effect of transverse surface stress is important. © 2008 American Institute of Physics.