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The present study elucidates an eco-friendly method for synthesizing silver nanoparticles using Phenerochaete chrysosporium (MTCC-787), its bactericidal and cytotoxic effect were studied. The formation of nanoparticles was evidenced by color change and UV–Vis spectroscopy. Atomic Force Microscope and Transmission electron microscope, showed spherical and oval shapes particles in the sizes ranging between 34 and 90 nm. The biosynthesised silver nanoparticles showed significant antibacterial activity against Pseudomonas aeruginosa, Klebsiella pneumoniae, Staphylococcus aureus and Staphylococcus epidermidis at a high dose. Further, the nanoparticles observed to be non-toxic at 12.5 μg/ml towards fibroblast cells.