© 2018 World Scientific Publishing Company. We investigate the effects of silver nanoparticles capped by 1-octanethiol (AgSC8) incorporated into the active layer of regioregular poly (3-hexylthiophene) (P3HT) and [6,6]-phenyl C61 butyric acid methyl ester (PCBM) in the fabrication of an inverted hybrid solar cell. The localized surface plasmon resonance (LSPR) excited in AgSC8 is expected to enhance the photon absorption as well as improve the efficiency of exciton generation and dissociation in this type of solar cell. The measured UV-visible absorption spectra show that photoactive polymer (P3HT:PCBM) layers with 2.09wt.% and 3.34wt.% AgSC8 incorporations remain homogeneous, while it appears aggregated with 5.02wt.% AgSC8 incorporation. Under the illumination of 100mW/cm2 simulated solar irradiation, the fabricated device exhibits an increased open circuit voltage (Voc) from 0.327V to 0.665V for the case with 3.34wt.% AgSC8 incorporation and an improved device power conversion efficiency (PCE) from 1.01% to 1.92%. These results suggest the favorably role of AgSC8 in photo-generation of exciton and its dissociation at the LSPR frequency of AgSC8. The decrease of short circuit current density (Jsc) from 10.316mA/cm2to8.668mA/cm2 nevertheless implies reduced conductivity due to AgSC8 incorporation.