Indentation using the atomic force microscope (AFM) has potential to measure detailed micromechanical properties of soft biological samples. However, interpretation of the results is complicated by the tapered shape of the AFM probe tip, and its small size relative to the depth of indentation. Finite element models (FEMs) were used to examine effects of indentation depth, tip geometry, and material nonlinearity and heterogeneity on the finite indentation response. Widely applied infinitesimal strain models agreed with FEM results for linear elastic materials, but yielded substantial errors in the estimated properties for nonlinear elastic materials. By accounting for the indenter geometry to compute an apparent elastic modulus as a function of indentation depth, nonlinearity and heterogeneity of material properties may be identified. Furthermore, combined finite indentation and biaxial stretch may reveal the specific functional form of the constitutive law—a requirement for quantitative estimates of material constants to be extracted from AFM indentation data.