The magneto optical Kerr effect enhancement in Co 2Ag 98 granular magnetic films annealed at 100, 250, 400, 500℃ was studied. The optical constants, the complex dielectric function and magneto optical Kerr parameters were measured at room temperature. The strong Kerr effect enhancement was observed around the Ag plasma edge. With the annealing temperature increasing, the values of the Kerr rotation θ k and Kerr ellipticity e k increase, the resonance like peaks appear in the Kerr rotation, and the peak positions are shifted toward the low energy region. From the analysis of the experiment data, it is concluded that the magneto optical Kerr effect enhancement is due to the presence of the steep plasma edge.