Structural and magnetotransport properties of metallic Fe(x)Ag(y)Al(z) nanogranular thin films were studied. These films with several compositions were prepared by dc magnetron sputtering. X-ray diffraction (XRD) measurements carried out on the samples show only Ag(111) peaks. The d-spacings determined from the Ag(111) peaks are smaller than the standard value for bulk Ag indicating a partial substitution of Fe and Al atoms in Ag matrix. Transmission electron diffraction (TEM) patterns show a number of Ag rings. Both XRD and TEM studies did not reveal any diffraction peaks due to Fe or Al. The average particle size determined from the TEM micrograph is 5.9 nm. This value is in good agreement with the grain size determined from the XRD patterns for the Al substituted samples. The MR was found to increase for smaller Al concentration and it decreases with further increase in Al content. In the samples investigated magnetoresistance ratio reaches a maximum value of about 4.5% for the Fe27Ag63Al10 film.