Biomimetic synthesis of metal nanoparticles (NPs) is safe and eco-friendly; therefore, find diverse applications. Considering this, the soil fungi Penicillium chrysogenum strain Fungal germplasm collection centre/ BLS1 was isolated, characterized and explored to synthesize extracellular silver NPs (AgNPs) under optimised conditions. The synthesis of AgNPs was investigated using ultraviolet (UV)-visible spectroscopy, Fourier-transform infra-red spectroscopy (FTIR), transmission electron microscope (TEM) and dynamic light scattering (DLS) analysis. Process optimisation exhibited AgNPs synthesis within 8 h using 2 mM AgNO3 at pH 11 and temperature 70°C. TEM analysis revealed polydispersed ellipsoidal shaped AgNPs with average particle size 96.8 nm as measured by DLS. AgNPs showed negative zeta potential that confers surface stability in solution. FTIR spectra confirmed the presence of protein bound to AgNPs. Antibacterial activity against Escherichia coli, Klebsiella pneumoniae and Staphylococcus aureus by the AgNPs (100 ppm) was demonstrated by counting colony forming unit , disc diffusion, and growth kinetics assay. Additionally radial assay revealed antifungal activity of AgNPs (100 ppm) against phytopathogenic fungi Sclerotinia sclerotiorum Microbial type culture collection 8785. Furthermore, AgNPs (100 ppm) did not show any cytotoxic effects on human Red blood cells. Therefore, this novel fungal strain can be utilised for biofabrication of AgNPs under optimised conditions and have shown strong antimicrobial property.