The study describes a novel and environment friendly route of biosynthesis of nanohydroxyapatite (nHAP). Bacillus licheniformis mediated synthesis of nHAP has been carried out with different phosphate concentrations (2%, 5%, 10% and 20% w/v) of potassium dihydrogen orthophosphate monobasic (K2HPO4). The synthesis is supported by a two-step mechanism - (i) solubilization of P by organic acids extracellularly secreted by the bacterial strain and (ii) gelation of P and Ca. The nHAP particles were characterized using electron microscopy and XRD analysis. Powdered crystalline particles with a size range of 30 ± 5 nm were obtained with shape and size dependent on phosphate concentrations. The particles showed no adverse effect on plant growth-promoting bacteria. Evaluation of nHAP prepared by this route with 2% P source provides scope for a wide range of applications, especially as a nano-fertilizer.