We demonstrate that silver/porous-Si nanocomposite powders are obtained by etching Si powders with metal assisted electroless chemical reaction in an aqueous solution of AgNO3 and HF. From x-ray photoelectron spectroscopy and scanning electron microscope measurements, metal layer consisting of nanometer-sized Ag particles and their aggregates is formed on each Si powder surface. Immoderate etching at higher concentrations of AgNO3 results in the decrease in Si volume and increase in Ag layer thickness. Dips are observed in reflectance spectra of the nanocomposite powders at ∼400 nm. By comparing the experimental spectra with theoretically calculated ones, these dips are found to arise from the optical absorption due to the roughness-assisted surface plasmon excitation and to be dependent on the size of the Ag nanostructure. The nanocomposite powders show weaker photoluminescence intensity than that of conventionally stain-etched porous Si powders, however, their photostability is improved. The improvement of the photostability is considered to be due to the existence of surface Si–O and Si–Ag bonds.