A model is presented for the formation of excited Ag-* (4d(9)5s(2)) atoms during sputtering of Ag metal by energetic Ar+ ions. The essential part of the formation process is the slow diffusion of 4d holes in the collision cascade from the sites of violent Ag-Ag collisions to the emitted Ag atoms. A computer simulation of Ag cascades and of the 4d-hole transport allows us to quantify the model and to describe all characteristic features of the available experimental data, in particular the fact that the sputtered Ag-* atoms exhibit a narrower kinetic energy distribution than those ejected in the electronic ground state.