The biosynthesis of silver nanoparticles (Ag NPs) has been studied in detail using two different approaches. For the first time, Bacillus cereus is used for one-pot biosynthesis of capsulated Ag NPs, using both intracellular and extracellular approaches. To discriminate between the produced nanostructures by these two approaches, their structures, nanomorphologies, optical properties, hydrodynamic sizes and zeta potentials are studied using different techniques. Fourier-transform infrared spectroscopy was used to identify the bioactive components responsible for the reduction of Ag⁺ ions into Ag and the growth of stable Ag NPs. Scanning and transmission electron microscopy images displayed spherical and polygon nanomorphology for the intracellular and extracellular biosynthesized Ag NPs. For intracellular and extracellular biosynthesized Ag NPs, a face-centred cubic structure was observed, with average crystallite sizes of 45.4 and 90.8 nm, respectively. In comparison to the noncatalytic reduction test, the catalytic activities of intracellular and extracellular biosynthesized Ag NPs were explored for the reduction of highly concentrated MB dye solution. Extracellular Ag NPs achieved 100% MB reduction efficacy after around 80 min, compared to 50.6% and 24.1% in the presence and absence of intracellular Ag NPs, respectively. The rate of MB reduction was boosted by 22 times with the extracellular catalyst, and by 3 times with the intracellular catalyst. Therefore, the extracellular production process of Ag NPs utilizing Bacillus cereus bacteria might be applied in the industry as a cost-effective way for eliminating the toxic MB dye.