We study saturable absorption and the nonlinear contribution to the refractive index of metal-nanoparticle composites by using a modifie self-consistent Maxwell-Garnett formalism for spherical nanoparticles and a generalization of the discrete-dipole formalism for particles of arbitrary shape and size. The results for fused silica doped with silver nanoparticles show that the saturation of loss of the composites is strongest near the surface plasmon resonance and the saturation intensity is in the range of 10 MW/cm(2). The nonlinear refraction index decrease with increasing intensity and its sign depends on frequency and fillin factor. The predictions show that metal-nanoparticle composites can be used for mode locking of lasers in a broad spectral range down to 400 nm, where attractive saturable absorbers are still missing.