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Nonlinear optical properties of Ag-Cu nanoclusters codoped in a SiO2 substrate prepared using the sol-gel technique are investigated under the influence of the second harmonic of a high-power nanosecond Nd:YAG laser. These films show self-defocusing nonlinearity and good nonlinear absorption behaviour. The nonlinear refractive index decreased with decreasing particle size. The nonlinear absorption, however, increased with increase in Cu concentration. The observed nonlinear absorption is explained through an interband absorption mechanism. Nonlinear scattering from the nanoparticles is also observed at higher intensities.