Cu2O-Ag nanoheterostructure was synthesized by a simple and eco-friendly co-precipitation method, and its morphologic structure, linear and nonlinear optical properties were studied. Though pure Cu2O nano- and microparticles are known for their nonlinear absorption properties, current studies show that Ag nanoparticle in contact with Cu2O can significantly change the nonlinear response. When compared to pure Cu2O, our results indicate that Cu2O-Ag composite shows a saturable absorption behavior at lower excitation powers and flips to reverse saturable absorption at higher excitation powers. The composite also results in the bandgap modification and opens an extra window for two-photon absorption, while the excited state absorption was more probable in pure Cu2O. Interband transition occurs in Ag nanoparticle due to simultaneous two-photon absorption when excited by 532nm. The excited carriers decay through nonradiative relaxation processes, leading to an increase in the nonlinear scattering mechanism, and the nonlinear scattering is found to increase with the excitation intensity. TEM data reveal the formation of spherical nanoheterostructure of Cu2O and Ag nanoparticles of similar to 30nm diameter. XRD analysis provided further insight into the morphologic structure.