The current methods for preparing gold nanoshells (AuNSs) produce shells with a diameter of approximately 40 nm or larger, with a relatively large polydispersity. However, AuNSs with smaller diameters and more monodispersity are better suited for biomedical applications. In this work, we present a modified method for the preparation of AuNSs, based on the use of sacrificial silver nanoparticles (AgNPs). We customized the Lee-Meisel method to prepare small and monodisperse AgNPs that were used as sacrificial nanoparticles to prepare extremely small monodispersed AuNSs with an average diameter from 17 to 25 ± 4 nm. We found that these AuNSs are faceted, and that the oxidized silver likely dissolves out of the nanoparticles through some of the facets on the AuNSs. This leads to a silver oxide plug on the surface of the AuNSs, which has not been reported before. The smaller AuNSs, prepared under the best conditions, absorb in the near infrared region (NIR) that is appropriate for applications, such as photothermal therapy or medical imaging. The AuNSs showed absorption peaks in the NIR similar to those of gold nanorods (AuNRs) but with better photothermal capacity. In addition, because of their negative charge, these AuNSs are more biocompatible than the positively charged AuNRs. The synthesis of small, monodisperse, stable and biocompatible nanoparticles, like the ones presented in this work, is of prime importance in biomedical applications.