The composite films containing Ag particles embedded in BaTiO3 matrix were deposited on MgO (100) substrates by using the pulsed laser deposition technique and characterized by x-ray diffraction and x-ray photoelectron spectroscopy. The absorption peak resulting from the surface plasmon resonance of Ag particles is found at the wavelength of 430nm. The third-order nonlinear optical characteristics of the films are determined by zscan technique using a nanosecond laser. The results show that the Ag/BaTiOa nanocomposite films exhibit great optical nonlinearities and the realand imaginary parts of the third-order nonlinear susceptibility x(3) are calculated to be 4.544 × 10-6 esu and 2.352 × 10-7 esu, respectively. The enhancement mechanism of x(3) is discussed.