Novel composite thin films consisting of nanosized Ag particles embedded in an amorphous Si matrix were made with AE contents from 0 at% to 61 at% by radio frequency co-sputtering oi Si and Ag. The microstructure and optical properties of the films were characterized by conventional and high resolution transmission electron microscop7 and spectrometry in the wavelength range from 200 to 1500 nm. it was found that the films consist of nanosized Ag particles (2.8-6.0 nm) particle and their clusters embedded in an amorphous Si matrix. The optical absorption spectra of the films up to 40 at% Ag exhibit characteristics similar to the amorphous semiconductor Si. At higher Ag contents two absorption maxims at 350 nm and 700 nm appear. Effective medium theories were examined to predict the optical properties of the films and it was found that the predictions from the Sheng Ping theory with a modified dielectric function of bulk Ag (taking into account the mean free path limitation of Ae particle boundaries) qualitatively agree with the measured absorption spectra. The two absorption maxims are accounted for as interfacial plasma resonance absorption associated with the silver particle/silicon matrix interfaces.