Metal nanoparticles have unique optical, electronic, and catalytic properties. There exist well-defined physical and chemical processes for their preparation. Those processes often yield small quantities of nanoparticles having undesired morphology, and involve high temperatures for the reaction and the use of hazardous chemicals. Relatively, the older technique of bioremediation of metals uses either microorganisms or their components for the production of nanoparticles. The nanoparticles obtained from bacteria, fungi, algae, plants and their components, etc. appear environment-friendly, as toxic chemicals are not used in the processes. In addition to this, the formation of nanoparticles takes place at almost normal temperature and pressure. Control of the shape and size of the nanoparticles is possible by appropriate selection of the pH and temperature. Three important steps are the bioconversion of Ag+ ions, conversion of desired crystals to nanoparticles, and nanoparticle stability. Generally, nanoparticles are characterized by the UV-visible spectroscopy and use of the electron microscope. Silver nanoparticles are used as antimicrobial agents and they possess antifungal, anti-inflammatory, and anti-angiogenic properties. This review highlights the biosynthesis of silver nanoparticles by various organisms, possible mechanisms of their synthesis, their characterization, and applications of silver nanoparticles. © 2014 American Scientific Publishers.