Graphene is a kind of two-dimensional material with a single-layer carbon structure and has been investigated in many high-performance photodetectors. The lateral photovoltaic effect (LPE) is widely used in the position-sensitive detectors (PSDs) owing to its linear response of photovoltage to the light position. In this Letter, a type of graphene-enhanced LPE is observed in the Ag nanoparticle-covered graphene/n-type Si. The LPE sensitivity can reach 97.3 mV/mm, much higher than the sensitivity of 1.3 mV/mm in the control sample of Ag/Si and 5.2 mV/mm of graphene/Si. Based on the photocarriers’ diffusion mechanism, tailoring a photocarrier transfer at the interface of a heterojunction plays a key role for the enhancement. These findings exhibit great application potential of graphene in the field of PSDs and offer an effective method for the optimization of LPE devices.