Indentation size effect at shallow indentation depths still remains a challenge as it cannot be correctly described by the Nix–Gao model based on the concept of strain gradient plasticity and geometrically necessary dislocations. The reasons for this discrepancy may be various, and multiple microstructural factors may play a role at the nanoscale. In the present paper, the breakdown of the Nix–Gao model was explored in electrodeposited nickel with different grain size/shape and crystallographic orientation. Crystallographic orientation has no significant effect on the indentation process at shallow depths if plastic deformation has already developed. On the other hand, decreasing the grain size leads to constrained plastic deformation in the grains below the indenter and to an effective plastic zone expansion. Further grain refinement down to the nanograin material leads to a change in the plastic deformation mechanisms to grain boundary-mediated deformation and a more pronounced breakdown of the Nix–Gao model.