We develop a microscopic model for fluorescence of a molecule (or semiconductor quantum dot) near a small metal nanoparticle. When a molecule is situated close to metal surface, its fluorescence is quenched due to energy transfer to the metal. We perform quantum-mechanical calculations of energy transfer rates for nanometer-sized Au nanoparticles and find that nonlocal and quantum-size effects significantly enhance dissipation in metal as compared to those predicted by semiclassical electromagnetic models. However, the dependence of transfer rates on molecule's distance to metal nanoparticle surface, d, is significantly weaker than the d−4 behavior for flat metal surface with a sharp boundary predicted by previous calculations within random phase approximation.