Localized surface plasmon resonance (LSPR) has been applied in photovoltaic devices to improve their photoelectric conversion efficiency. In this study, the mechanism of LSPR in dye-sensitized solar cells (DSSCs) was determined. Specifically, silver nanoparticles were formed by evaporating silver in electro-beam equipment and then annealing it in a tube furnace. The sizes of the nanoparticles varied with the changes in their thicknesses during evaporation and annealing. A DSSC-based graphene was designed to consist of different sizes of metal nanoparticles assembled on a cathode electrode. The photon electric performance of the DSSCs, which depended on Ag nanoparticles, was analyzed in detail, with a particular focus on nanoparticle size. Compared with the DSSC without Ag nanoparticles, the DSSC with LSPR exhibited excellent electric current density and incident photon-to-current efficiency (IPCE) performance due to the LSPR effect. The DSSC assembled with 10 nm-thick Ag film and annealed to form nanoparticles exhibited a high IPCE of 70.03%. The IPCE value of this DSSC was 45.15% higher than that of the pure graphene-based DSSC (31.62%). However, Ag nanoparticles increased to a certain degree and became aggregated and concatenated, thereby decreasing the LSPR effect on DSSCs. Therefore, LSPR plays an important role in the photon-electrical performance of DSSCs.