Laser damage thresholds of Ag, Au and Ag-Au alloys in air and water are measured. Alloy thresholds are lower than those of Ag and Au due to low thermal conductivity. Laser damage thresholds in water are ∼1.5 times higher than those in air. Light scattering mechanisms responsible for high thresholds in water are suggested. Light scattering mechanisms are supported by optical reflectance measurements.