The optical constants of silver and five dilute silver-indium alloys (<5% In) were determined from reflectance and transmittance measurements in the spectral region between 3.35 and 4.28 eV on vacuum-evaporated films. The data are consistent with the assumption that the onset of interband absorption in silver arises primarily from direct interband transitions from the d band near L3 to the Fermi surface, but with a small, though not insignificant, contribution due to direct transitions from the conduction band near L2′ to the conduction band near L1. The changes in the complex dielectric constant induced by alloying were interpreted to indicate a shift of the L3→EF transition to higher energy and a shift of the L2′→L1 transition to lower energy. Because contributions to the dielectric constant of the two transitions overlap and because of the limited energy range investigated, no firm estimates of the magnitudes of the shifts could be made, but it seems clear that the L2′−L1 energy gap decreases as indium is added to silver. The strength of the interband absorption in the alloys at energies below that of the edge in silver appeared to be too strong to be accounted for by indirect transitions. Alloying-induced changes in the energy-loss function showed that the relatively undamped plasma resonance in silver near 3.8 eV becomes strongly damped as indium is added. The increase in damping was attributed partly to a decrease in the conduction-electron relaxation time, and partly to the shift of interband transitions so that they occur at the plasma energy. Data from measurements on films cooled to liquid-helium temperature showed some sharpening of structure in the complex dielectric constant and of the peak in the loss function.