Hybrid nanocomposites of II-VI semiconductor nanoparticles are gaining great interest in nonlinear optoelectronic devices. Present work includes the characterization of CdSe polymer nanocomposite prepared by chemical in situ technique. From X-ray diffraction, the hexagonal wurtzite structure of nanoparticles has been confirmed with spherical morphology from transmission electron microscopy. Ag-CdSe hybrid polymer nanocomposite has been prepared chemically at different Ag concentrations. The presence of Ag in hybrid nanocomposite has been confirmed with energy-dispersive X-ray spectroscopy. The effect of varying Ag concentration on the linear and nonlinear optical properties of the nanocomposites has been studied. In linear optical parameters, the linear absorption coefficient, refractive index, extinction coefficient and optical conductivity have been calculated. The third-order nonlinear optical properties have been observed with open-and closed-aperture Z-scan technique. The large nonlinear refractive index *10 -5 cm 2 /W with self-focusing behaviour is due to the combined effect of quantum confinement and thermo-optical effects. The enhanced nonlinearity with increasing Ag content is due to the surface plasmon resonance, which enhances the local electric field near the nanoparticle surface. Thus, Ag-CdSe hybrid polymer nanocomposite has favourable nonlinear optical properties for various optoelectronic applications.