The biosynthesis of nanoparticles has received increasing interest because of the growing need to develop safe, cost-effective and environmentally friendly technologies for the synthesis of nano-materials. In this study, silver nanoparticles (AgNPs) were synthesized using a reduction of aqueous Ag(+) ions with culture supernatant from Pleurotus ostreatus. The bioreduction of AgNPs was monitored by ultra violet-visible spectroscopy and the obtained AgNPs were characterized by transmission electron microscopy (TEM) and Fourier transform infrared spectroscopy techniques. TEM studies showed the size of the AgNPs to be in the range of 4-15 nm. The formation of AgNPs might be an enzyme-mediated extracellular reaction process. Furthermore, the antifungal effect of AgNPs against Candida albicans as compared with commercially antifungal drugs was examined. The effect of AgNPs on dimorphic transition of C. albicans was tested. The anticancer properties of AgNPs against cells (MCF-7) were also evaluated. AgNPs caused a significant decrease in cell viability of an MCF-7 cell line (breast carcinoma). Exposure of MCF-7 cells with AgNPs resulted in a dose-dependent increase in cell growth inhibition varying from 5 to 78 % at concentrations in the range of 10-640 μg ml(-1). The present study demonstrated that AgNPs have potent antifungal, antidimorphic, and anticancer activities. The current research opens a new avenue for the green synthesis of nano-materials.