Abstract: The nonlinear absorption of Ag atomic clusters and nanoparticles dispersed in a transparent oxyfluoride glass host has been studied. The as-prepared glass, containing 0.15 atom % Ag, shows an absorption band in the UV/violet attributed to the presence of amorphous Ag atomic nanoclusters with an average size of 1.2 nm. Upon heat treatment the Ag nanoclusters coalesce into larger nanoparticles that show a surface plasmon absorption band in the visible. Open aperture z-scan experiments using 480 nm nanosecond laser pulses demonstrated nonsaturated and saturated nonlinear absorption with large nonlinear absorption indices for the Ag nanoclusters and nanoparticles, respectively. These properties are promising, e.g., for applications in optical limiting and objects contrast enhancement.