On the basis of measurements and theoretical analysis, linear and nonlinear optical properties on the Ag:Bi2O3 composite films with different Ag concentrations were investigated. The relationship between the Ag concentrations and the surface plasmon resonance (SPR) of Ag:Bi2O3 composite films were characterized by UV-VIS-NIR spectroscopy, and the dependence of third-order nonlinear susceptibility of composite films on Ag concentrations was investigated by picosecond Z-scan technique with different excitation wavelength (532nm and 1064nm). The analysis of optical properties of these films was carried out using the theories of surface plasmon resonance and localized field enhancement respectively. From the experimental and theoretical results, the dependence of third-order nonlinear susceptibilities χ(3) on Ag concentration was shown. With Ag concentration around 35％ and the excitation wavelength at 532nm near the surface plasmon resonance (560nm—622nm), the third-order nonlinear susceptibility χ(3) showed a maximum value of 2.4×10-9 esu.