We report the fabrication of nanoparticle silver oxide thin films by rf magnetron sputtering and characterization of their nonlinear optical properties. The chemical decomposition and reversibility of AgO x compounds were studied by thermogravimetric analysis, differential scanning calorimetry, and x-ray diffraction. Electron spectroscopy for chemical analysis measurements revealed a 0.5 eV negative binding energy shift from AgO to Ag 2 O phase. The effect of particle plasmon resonance was confirmed by the absorption band shift with increased Ag 2 O particle size. The measured third-order nonlinear susceptibility (3 ϭ3.4ϫ10 Ϫ7 esu) and response time ͑27 ps͒ of the Ag 2 O nanoparticles makes it promising for applications in all-optical switching devices and optical data storage systems.