Sputtered Au–TiNxthin films were deposited from two composite powder targets of Au and TiN with 4.4 and 8.5 mol % TiN, respectively. The composition of the sputtering atmosphere Ar–N2was varied with the N2partial pressure ranging from 0 to 2×10−1Pa. The influence of the reactive gas on the optical properties of the sputtered films has been investigated by means of differential reflectivity measurements and polarization modulation ellipsometry, in the photon energy range 1.5–5 eV. The observed properties are qualitatively interpreted on the basis of a composite microstructure: a dilute Au:Ti alloy acts as the host phase containing a small fraction of segregated TiNxgrains, of typical dimension lower than 2.5 nm. The concentration of the matrix alloy (Au:Ti) was deduced from the measured dielectric function on the basis of the virtual‐bound‐state model, which applies to transition‐metal impurities in noble‐metal hosts. The influence of the dispersed refractory phase has then been examined within a scheme of mean‐field theory.