<p>The nonlinear absorption coefficient (β) and nonlinear refractive index (n₂) of citrate-capped gold nanoparticles (CC-AuNPs) encapsulated and stabilized within a composition of water, n-heptane, and anionic AOT surfactant were studied by z-scan technique which includes a laser with a wavelength of 532nm and a power of 80mW. Encapsulation of AuNPs (Cap-CC-AuNPs) consists of aqueous droplets uniformly dispersed in the continuous phase of n-heptane, which enables the effective Cap-CC-AuNPs that exhibited significant nonlinear absorption despite their lower concentration, attributed to the reduced dielectric constant of the bulk medium. The aggregation of CC-AuNPs in aqueous solutions, which is the result of the increase of ions, has increased the value of β and elastic scattering. While, in the water–ethanol binary mixture, even with low aggregation along with the reduction of light scattering, the β value was enhanced with a reduction of the dielectric constant of the solution. The source of increase in nonlinear optical properties and elastic scattering of gold nanoparticles in solutions is increase in polarizability. Quantum perturbation theory was employed to calculate the dipole moment of AuNPs, it is distinguished that the ground state dipole moment of AuNPs increase with encapsulation. Cap-CC-AuNPs can serve as a photosensitizer in photodynamic therapy or other optical devices.</p>