The effect of rare-earth (Sm) microalloying on the thermal stability and phase selection along with the effect of nanocrystallization on the mechanical properties of amorphous melt-spun ribbons of Zr50Cu40Al10, Zr49Cu39.2Al9.8Sm2 and Zr48Cu38.4Al9.6Sm4 alloys were investigated using differential scanning calorimetry (DSC), X-ray diffraction (XRD), transmission electron microscopy (TEM), Vickers and nanoindentation hardness tests and micropillar compression analysis. XRD and TEM analyses showed that all samples were fully amorphous in as-spun state; however, crystallization sequences for the Sm-free and the Sm micro-alloyed samples were different during devitrification. Combined study of XRD, DSC and TEM on melt-spun ribbons show that Zr48Cu38.4Al9.6Sm4 have nanocrystallization of Cu2Sm phase with an average diameter of 10 nm, which was absent in Zr50Cu40Al10, prior to crystallization of Cu10Zr7 phase. The nanoindentation and micropillar compression tests revealed Cu2Sm nanocrystals embedded in Zr48Cu38.4Al9.6Sm4 alloy improves strength and hardness. On the other hand, presence of these nanocrystals deteriorate shear band stability and thus result in a catastrophic brittle fracture through a single shear band burst.