A facile one-step synthesis of Ag nanoparticles (NPs) with particle sizes less than 5 nm is presented. The average size, size distribution and morphology of the NPs were determined using a number of techniques, including UV-visible absorption spectroscopy, transmission electron microscopy, energy-dispersive X-ray spectroscopy (EDX) and a particle size analyzer (PSA). Furthermore, the resulting Ag NPs, without extra treatment, could be used as a probe to detect Hg(II) ions in aqueous media. The response in absorbance was linearly proportional to the concentration of mercury ions in the range 0.2–3 nM. Unlike some recent reports, this absorbance-based detection scheme does not require surface modification of the NPs or oligonucleotides as targeting elements, or complicated detection systems. The method is very simple yet highly sensitive, with an observed detection limit down to 0.2 nM. Most other common ions, at 100-fold higher concentrations, have little interfering effect on the mercury ion detection.