Cuprous oxide nanoparticles (Cu2O NPs) were fabricated in reverse micellar templates by using lipopeptidal biosurfactant as a stabilizing agent. Scanning electron microscopy (SEM), transmission electron microscopy (TEM), energy dispersive x-ray spectrum (EDX) and UV-Vis analysis were carried out to investigate the morphology, size, composition and stability of the nanoparticles synthesized. The antibacterial activity of the as-synthesized Cu2O NPs was evaluated against Gram-positive B. subtilis CN2 and Gram-negative P. aeruginosa CB1 strains, based on cell viability, zone of inhibition and minimal inhibitory concentration (MIC) indices. The lipopeptide stabilized Cu2O NPs with an ultra-small size of 30 ± 2 nm diameter exhibited potent antimicrobial activity against both Gram-positive and Gram-negative bacteria with a minimum inhibitory concentration of 62.5 µg/mL at pH5. MTT cell viability assay displayed a median inhibition concentration (IC50) of 21.21 μg/L and 18.65 μg/mL for P. aeruginosa and B. subtilis strains respectively. Flow cytometric quantification of intracellular reactive oxygen species (ROS) using 2,7-dichlorodihydrofluorescein diacetate staining revealed a significant ROS generation up to 2.6 to 3.2-fold increase in the cells treated with 62.5 µg/mL Cu2O NPs compared to the untreated controls, demonstrating robust antibacterial activity. The results suggest that lipopeptide biosurfactant stabilized Cu2O NPs could have promising potential for biocompatible bactericidal and therapeutic applications.