In this chapter, we describe changes that occur in the optical properties of materials when their sizes are decreased to the nanometer scale. Intriguingly, such changes have been known and used for centuries. Some of the most dramatic changes in the optical properties of materials-perceived by the human eye as changes in color-occur on scales of 0.1-10 nm. In the rst part of this chapter, we describe size-dependent optical properties from the perspective of absorption and emission (Section 3.1), where the sizedependent properties of materials are classi ed according to the types of excitons involved in interactions. Size effects in absorption and scattering are treated in Section 3.2 by introducing the results of the general theory of Mie. This is followed by a description of localized plasmons in metallic nanoparticles and their applications in surface-induced enhancement of Raman scattering. The next two sections focus on nanometer-scale interactions. The interactions are classi ed in terms of particle-particle phenomena (discussed in Section 3.3), which include mainly strongly distance-dependent energy transfer processes as well as photo-induced charge transport, and particle-light interactions. The latter (described in Section 3.4) is due to modi cations of the properties of light in con ned geometries such as optical microcavities and the presence of dielectric interfaces. Both these effects signi cantly affect light emitted by materials.