Many optical diagnostic approaches rely on changes in scattering and absorption properties to generate optical contrast between normal and diseased tissue. Recently, there has been increasing interest in using exogenous agents to enhance this intrinsic contrast with particular emphasis on the development for targeting specific molecular features of disease. Gold nanoshells are a class of core-shell nanoparticles with an extremely tunable peak optical resonance ranging from the near-UV to the mid-IR wavelengths. Using current chemistries, nanoshells of a wide variety of core and shell sizes can easily be fabricated to scatter and/or absorb light with optical cross sections often several times larger than the geometric cross section. Using gold nanoshells of different size and optical parameters, we employ Monte Carlo models to predict the effect of varying concentrations of nanoshells on tissue reflectance. The models demonstrate the importance of absorption from the nanoshells on remitted signals even when the optical extinction is dominated by scattering. Furthermore, because of the strong optical response of nanoshells, a considerable change in reflectance is observed with only a very small concentration of nanoshells. Characterizing the optical behavior of gold nanoshells in tissue will aid in developing nanoshells as contrast agents for optical diagnostics.