We developed a novel method to fabricate nanocomposite monodisperse SiO2 spheres (∼100 nm) containing homogeneously dispersed Ag quantum dots (2∼5 nm). The inclusion morphology is controlled through the timing of the photochemical reduction of silver ions during hydrolysis of tetraethoxysilane in a microemulsion. Depending on the timing, Ag quantum dots can be directed to different annuli within the SiO2 spheres, as well as onto the SiO2 sphere surfaces. The embedded Ag quantum dots show a plasmon resonance absorption band at 438 nm. These Ag@SiO2 particles have significant surface charge and readily self-assemble into crystalline colloidal array (CCA) photonic crystals which Bragg-diffract light in the visible region. The magnitude of the plasmon resonance absorption depends on the CCA Bragg diffraction condition. The negative dielectric constant of the silver nanoparticles may be decreasing the silica−silver nanodot composite refractive index below that of the water medium. We may be observing an analogue of the Borrmann effect previously observed in X-ray scattering, where the incident and diffracted electric field standing wave becomes localized in regions of small CCA crystal absorption.