In this work, we present a systematic first-principles density-functional theory based study of geometry, electronic structure, and optical properties of armchair phosphorene nanoribbons (APNRs), with the aim of understanding the influence of edge passivation. Ribbons of width ranging from 0.33 nm to 3.8 nm were considered, with their edges functionalized with the groups H, OH, F, Cl, S, and Se. The geometries of various APNRs were optimized, and the stability was checked by calculating their formation energies. Using the relaxed geometries, calculations of their band structure and optical properties were performed. Pristine APNRs, as expected, exhibit significant edge reconstruction, rendering them indirect band gap semiconductors, except for one width (N = 5, where N is the width parameter) for which a direct band gap is observed. The edge passivated APNRs are found to be direct band gap semiconductors, with the band gap at the Γ-point, for all the functional groups considered in this work. To obtain accurate estimates of band gaps, calculations were also performed using HSE06 hybrid functional for several APNRs. Our calculations reveal that functional groups have significant influence on the band gaps and optical properties of narrower APNRs. For wider passivated ribbons, with the increasing ribbon widths, the gaps converge to almost the same value, irrespective of the group. We also performed calculations including the spin–orbit coupling (SOC) for hydrogen passivated APNRs with N = 5 and 11. We found that SOC has no significant influence on the band structure of the studied APNRs. However, for the broader APNR, a lowering of peak intensities was observed in the optical absorption spectrum beyond 5 eV.