We have calculated the contribution of intersubband transitions to the third order optical nonlinear susceptibility, $chi^{(3)}(omega,omega,omega)$ for nonresonant as well as resonant third harmonic generation and $chi^{(3)}(omega,-omega,omega)$ for nonlinear refraction and absorption. As examples, we consider InAs/AlSb and GaAs/GaAlAs quantum wells. The effects of finite barrier height, energy band nonparabolicity, and high carrier concentrations are included. It is shown that quantum confinement, rather than the band nonparabolicity, is responsible for high values of nonresonant $chi^{(3)}_{zzzz}$. Very high values of $chi^{(3)}_{zzzz}$ are obtained for third harmonic generation and two photon absorption for incident wavelength near 10.6 $mu$m. Intensity dependence of refractive index and of absorption co-efficient is also discussed for intensity well above the saturation intensity. Effective medium theory is used to incorporate the collective effects.