The size dependence of the photoluminescence spectra from silver nanoparticles embedded in a silica host medium was observed. The quantum yield of the photoluminescence increased when the size of the nanoparticles was decreased. The quantum yield for 8 nm silver nanoparticle was estimated to be on the order of ${10}^{-2}$ which is ${10}^8$ times higher than the one observed for bulk silver. The two photoluminescence bands observed from silver nanoparticles were rationalized as the radiative electron interband transitions and radiative decay of the surface plasmons in silver nanoparticles. The strong local electric field induced by the surface-plasmon resonance in silver nanoparticles enhances the exciting and emitted photons and increases the quantum yield of the photoluminescence.