Composite films containing silver nanoparticles embedded in diamond-like carbon (DLC) matrix were deposited on glass substrates by using capacitatively coupled plasma (CCP) chemical vapour deposition techninique (CVD). Particle size and metal volume fraction were tailored by varying the relative amount of methane of a gas mixture of methane + argon in the plasma. Optical constants of the films were evaluated. Bonding environment in these films were obtained from Raman and FTIR studies. Blue-shift of the surface plasmon resonance peak in the optical absorbance spectra of the films could be associated with the reduction of the particle size while red shift was associated with the increase in volume fraction of metal particles. The experimental results have been discussed in light of the existing Mie theory.