Silver compounds have been used extensively for wound healing because of their antimicrobial properties, but high concentrations of silver are toxic to mammalian cells. We designed a peptide that binds silver and releases only small amounts of this ion over time, therefore overcoming the problem of silver toxicity. Silver binding was achieved through incorporation of an unnatural amino acid, 3′-pyridyl alanine (3′-PyA), into the peptide sequence. Upon the addition of silver ions, the peptide adopts a beta-sheet secondary structure and self-assembles into a strong hydrogel as characterized by rheology, circular dichroism, and transmission electron microscopy. We show that the resulting hydrogel kills Escherichia coli and Staphylococcus aureus but is not toxic to fibroblasts and could be used for wound healing. The amount of Ag(I) released by hydrogels into the solution is less than 4% and this low amount of Ag(I) does not change in the pH range 6–8. These studies provide an initial indication for use of the designed hydrogel as injectable, antimicrobial wound dressing.