An investigation of Au/SiO2 composite multilayer films with a large third-order optical nonlinearity is reported in this article. Multilayer films containing Au nanoparticles with narrow size and shape distributions can be obtained by controlling the thickness of the Au layer, as well as the annealing temperature and time duration. It is found that the peak of surface plasmon resonance (SPR) of films with mean nanoparticle size of 30 nm is located at 2.35 eV with a width of 350 meV. The SPR peak of films containing larger or smaller particles red-shifts and broadens due to the particle size and shape effects. The third-order optical nonlinear susceptibility χ(3) of these films has a maximum value of about 5.1×10-6 esu at 532 nm when the mean nanoparticle size is around 30 nm. We attribute the observed size dependence of χ(3) to the competition between the enhancement of the local field factor and the skin-depth effect. © 2003 American Institute of Physics.