<p>This study investigates the effect of capsule size and number on the localized surface plasmon resonance and nonlinear optical properties of silver nanoparticles (AgNPs). Emulsions encapsulated with varying water-to-AOT surfactant ratios (X), water volume fractions (Φ), and AgNP concentrations were synthesized in the continuous phase of n-Heptane. The nonlinear absorption coefficient (β) and the nonlinear refractive index (n₂) were measured via the Z-scan technique. These results showed conclusively that as X decreases, β substantially increases due to an improved aggregation of AgNPs, as manifested as an increase in the aggregation coefficient, κ. At the same time, a red shift in the LSPR peaks, especially for the dispersed particle peak (~ 425&#xa0;nm) and the aggregate peak (~ 573&#xa0;nm) was accrued. A strong correlation was established, showing that β increases with rising κ and light scattering intensity. The n₂ value was found to be affected with droplet size and concentration. This study concludes that manipulating the emulsion parameters (X and Φ) directly controls the nonlinear optical response, which in turn provides a powerful tool to tune and enhance it for potential applications in optics.</p>