Ag/titanium oxide granular composite films with Ag atom concentration in the range of 34% to 69% were prepared by using co-sputtering technique in Ar atmosphere at the pressure of 3.0×10 −2 Torr. The chemical binding energy of Ag and Ti in the composites was investigated by X-ray photoelectron spectroscopy. The Ag particle size measured by SEM is in the range of 20∼50 nm. The strong resonant absorption near 860 nm is observed in the composites with 34% atom concentration of Ag, which implies a large enhancement of local field and optical nonlinearity in the co-sputtered Ag/titanium oxide composites.