In this study, extracellular extract of plant growth promoting bacterium, Nitrobacter sp. is used for the bioconversion of AgNO3 (silver nitrate) into Ag2O (silver oxide nanoparticles). It is an easy, ecofriendly and single step method for Ag2O NPs synthesis. The bio-synthesized nanoparticles were characterized using different techniques. UV-Vis results showed the maximum absorbance around 450 nm. XRD result shows the particles to have faced centered cubic (fcc) crystalline nature. FTIR analysis reveals the functional groups that are involved in bioconversion such as C-N, N-H and C=O. Energy-dispersive X-ray spectroscopy (EDAX) spectrum confirms that the prepared nanoparticle is Ag2O NPs. Particle size distribution result reveals that the average particle size is around 40 nm. The synthesized Ag2O NPs found to be almost spherical in shape. Biosynthesized Ag2O NPs possess good antibacterial activity against selected Gram positive and Gram negative bacterial strains namely Salmonella typhimurium, Staphylococcus aureus, Escherichia coli and Klebsiella pneumoniae when compared to standard antibiotic. In addition, Ag2O NPs exhibits excellent free radical scavenging activity with respect to dosage. Thus, this study is a new approach to use soil bacterial extract for the production of Ag2O NPs for biomedical application.