PbSe/polyvinyl alcohol composite film with third-order nonlinear optical property was prepared by wet-chemical method. The morphology of the PbSe nanocrystals was characterized by transmission electron microscope, and the surface morphology of the composite film was characterized by scanning electron microscope. The third-order optical nonlinearity of film was investigated by using the laser Z-scan technique with 38 ps pulses width at 532 nm. The experimental results show that the diameter of PbSe nanocrystals is about 10 nm, which is in strong quantum confinement regime, and the film has a flat surface. Negative nonlinear refraction and reverse saturable absorption properties were observed, the third-order nonlinear refractive index χ(3) was found to be 3.6×10－11 esu.