The use of silver nanoparticles is one of the fastest growing product categories in the nanotechnology industry, with a focus on antimicrobial activity. However, thus far, toxicity data for silver nanoparticles are limited. In this study, we investigated the cytotoxic effects of silver nanoparticles (Ag NPs) and the pathway by which they affect A549 lung epithelial cells. The effects of Ag NPs on cell survival, cell cycle progression, and mRNA and protein alterations of selected cell cycle- and apoptosis-related genes were studied using formazan dye and LDH release assays, flow cytometric analysis, semi-quantitative RT-PCR, and Western blot analysis. Ag NPs reduced cell viability, increased LDH release, and modulated cell cycle distribution through the accumulation of cells at G2/M and sub-G1 phases (cell death), with a concurrent decrease in cells at G1. Ag NP treatment increased Bax and Bid mRNA levels and downregulated Bcl-2 and Bcl-w mRNAs in a dose-dependent manner. Furthermore, Ag NPs altered the mRNA levels of protein kinase C (PKC) family members. In particular, ectopic overexpression of PKCζ led to the enhancement of cellular proliferation and reduced sensitivity to Ag NPs in A549 cells. Together, these results suggest that Ag NPs induce strong toxicity and G2/M cell cycle arrest by a mechanism involving PKCζ downregulation in A549 cells.