The piezoelectric market is ruled by lead-based compounds that should be substituted by environmentally friendly materials. Despite the substantial literature on lead-free candidates available, stress effects on the dielectric, piezoelectric and ferroelectric performance of thin films from the nano- to macroscale have been barely addressed until now. In this work, a combination of multiscale characterization techniques is used to disclose the induced mechanical deformation impact on the dielectric, polar and structural properties of polycrystalline lead-free potassium sodium niobate (KNN) thin films fabricated on platinized silicon (Pt/Si(100)), strontium titanate (Pt/STO(100)) and magnesium oxide (Pt/MgO(100)) substrates. A tensile residual stress state characterizes KNN films on Pt/Si (+210 ± 28 MPa), while KNN films on Pt/STO and Pt/MgO (−411 ± 18 MPa and −494 ± 26 MPa, respectively) evidence a compressive residual stress condition. Films with the highest compressive state (on Pt/MgO) exhibit the lowest dielectric losses with the highest electric permittivity and the maximum electric polarization; concomitantly they present the most dense and homogeneous microstructure, with small grains and a narrow grain size distribution. In contrast, tensile residual stress films (on Pt/Si) show the smallest polarization with an almost negligible out-of-plane component of piezoresponse. Of relevance, phase transition temperatures are markedly affected by the type and magnitude of the residual stress: they are the lowest for KNN films on Pt/MgO and highest for KNN films on Pt/Si. The narrowest temperature range for tetragonal phase is recorded for KNN films on Pt/MgO. For the first time, an approach to generate a morphotropic phase boundary in KNN thin films by use of compressive residual stress is thus demonstrated. This work highlights the impact of stress, as a key parameter in the performance of KNN polycrystalline thin films. These results have implications in terms of understanding lead-free ferroelectric/piezoelectric behaviour and its application/commercialization.