Although nanosilver particles are commonly used as oil lubrication additives, their mechanism for improving lubrication at the atomic scale remains unclear. This article explains how the performance of a pentaerythritol oleate lubrication system can be improved using silver nanoparticles through molecular dynamics simulation. Additionally, tribological tests were conducted using a reciprocating friction and wear testing machine. The relative concentrations and simulated shear conformation revealed that silver nanoparticles underwent deformation under shear stress and fractured at the interlayer slip. This resulted in the formation of a deposited film that spread over both the top and bottom Fe layers. We characterized the interaction between pentaerythritol oleate molecular chains and Fe layers by analyzing interfacial interaction energies, mean square displacements, and self-diffusion coefficients. Our findings indicate that the presence of silver nanoparticles improves both the adsorption of pentaerythritol oleate molecular chains onto the Fe layer and their diffusion behavior. The results of tribological tests indicate that adding silver nanoparticles significantly reduces friction coefficient and frictional wear across various lubrication conditions. The addition of silver nanoparticles at different loads and temperatures resulted in varying reductions in the coefficient of friction and wear. At a load of 20 N and a temperature of 298 K, the coefficient of friction decreased by 9%, and wear decreased by 31%. When the load was reduced to 2 N while maintaining a temperature of 298 K, the coefficient of friction decreased by 8% and wear decreased significantly by 84%. Finally, at a load of 20 N but with an increased temperature to 373 K, there was a larger reduction in the coefficient of friction (23%) compared to wear (50%). The film-formation mechanism of improved lubrication by silver nanoparticles was verified through tribological tests and simulations.