Dielectric properties of silver/SiO₂ nanocomposite thin films grown by high-pressure d.c. sputtering technique were studied by spectroscopic ellipsometry (300–800 nm). The dielectric behavior of the nanocomposite thin films largely depended on the particle size, its number density and the surrounding environments. The films showed semiconductor-like behavior up to a critical particle size and concentration, beyond which the films exhibited the typical surface plasmon resonance characteristics in their optical properties. The refractive index was also found to have a strong dependence on the particle size and its dispersion in the matrix. The results were found to be consistent with those obtained from UV-VIS optical absorbance data. Bruggeman effective medium theory was used to explain the experimental resultsussed.