The field of nanoparticle research has drawn much attention in the past decade as a result of the search for new materials. Size confinement results in new electronic and optical properties, possibly suitable for many electronic and optoelectronic applications. A characteristic feature of noble metal nanoparticles is the strong color of their colloidal solutions, which is caused by the surface plasmon absorption. This article describes our studies of the properties of the surface plasmon absorption in metal nanoparticles that range in size between 10 and 100 nm. The effects of size, shape, and composition on the plasmon absorption maximum and its bandwidth are discussed. Furthermore, the optical response of the surface plasmon absorption due to excitation with femtosecond laser pulses allowed us to follow the electron dynamics (electron-electron and electron-phonon scattering) in these metal nanoparticles. It: is found that the electron-phonon relaxation processes in nanoparticles, which are smaller than the electron mean free path, are independent of their size or shape. Intense laser heating of the electrons in these particles is also found to cause a shape transformation (photoisomerization of the rods into spheres or fragmentation), which depends on the laser pulse energy and pulse width.