We have systematically explored how plasmonic effects influence the characteristics of polymer photovoltaic devices (OPVs) incorporating a blend of poly(3-hexylthiophene) (P3HT) and [6,6]-phenyl-C(61)-butyric acid methyl ester (PCBM). We blended gold nanoparticles (Au NPs) into the anodic buffer layer to trigger localized surface plasmon resonance (LSPR), which enhanced the performance of the OPVs without dramatically sacrificing their electrical properties. Steady state photoluminescence (PL) measurements revealed a significant increase in fluorescence intensity, which we attribute to the increased light absorption in P3HT induced by the LSPR. As a result, the rate of generation of excitons was enhanced significantly. Furthermore, dynamic PL measurements revealed that the LSPR notably reduced the lifetime of photogenerated excitons in the active blend, suggesting that interplay between the surface plasmons and excitons facilitated the charge transfer process. This phenomenon reduced the recombination level of geminate excitons and, thereby, increased the probability of exciton dissociation. Accordingly, both the photocurrents and fill factors of the OPV devices were enhanced significantly. The primary origin of this improved performance was local enhancement of the electromagnetic field surrounding the Au NPs. The power conversion efficiency of the OPV device incorporating the Au NPs improved to 4.24% from a value of 3.57% for the device fabricated without Au NPs.