Nanocomposite thin films of fullerene C(60) containing Ag nanoparticles (NPs) were synthesized by thermal codeposition. The surface plasmon resonance (SPR) band of the nanocomposite film was observed in the region 450-550 nm, showing a large redshift with increasing metal concentration. This is explained by the Maxwell-Garnett effective medium theory considering the absorbing nature of fullerene C(60). The C(60)-Ag nanocomposite thin film with lowest Ag concentration was annealed at increasing temperatures in neutral atmosphere. The SPR band showed first a small redshift after annealing at small temperature then progressive blueshift at higher temperature. This behavior of SPR is explained by the increased particle-particle interaction due to the compaction of the fullerene C(60) film upon annealing at low temperature and the transformation of fullerene C(60) matrix into amorphous carbon at higher temperature. Rutherford backscattering spectrometry and transmission electron microscopy were used to quantify Ag metal content and the microstructural evolution of Ag NPs in the nanocomposite films, respectively. Thermal induced structural transformations of fullerene C(60) molecules of host matrix were investigated by Raman spectroscopy. (C) 2010 American Institute of Physics.