We have investigated the effects of formalin on the assembly of colloidal gold nanoparticles (AuNPs) prepared by laser ablation of a solid gold target in deionized water. Upon addition of formalin, the surface plasmon resonance (SPR) band at 519 nm for pure AuNPs decreases and shifts to red while a new broad SPR band appears at ~700 nm. The red-shift is prominent with increase in the incubation time. The average size of the initial AuNPs is around 12 nm but it increases to 23 nm after addition of formalin. It turns out that formalin acts as a cationic surfactant for AuNPs with negative surface charge in the colloidal solutions. Furthermore, through analysis of the Raman spectrum of formalin and the density functional theory calculations, we confirm that methanediol is the main species in formalin which is in charge of the aggregation of AuNPs.