The use of localized surface plasmon (LSP) interaction for significantly enhancing InGaN absorption near its band edge and the overall efficiency of an InGaN-based solar cell by embedding Ag nanoparticles (NPs) in the InGaN absorbing layer is numerically demonstrated. The generation of LSP resonance on the embedded Ag NPs and the NP scattering can produce a field distribution in the InGaN layer for enhancing absorption. It is shown that the embedded Ag NPs do not significantly affect the transport of the photo-generated carriers. The distortion of static electrical stream lines in the solar cell due to the embedded Ag NP leads to a decrease of photocurrent by only a few percents. Based on the material parameter values we use, unless the surface recombination velocity at the interface between the Ag NP and surrounding InGaN is extremely high, Ag NP embedment in the absorbing layer of an InGaN-based solar cell can enhance its efficiency by up to 27%. Such an increase is significantly larger than that achieved by depositing metal NP on the top surface of a solar cell.