In the present work, silver nanoparticles (AgNPs) are generated using the Micro-Electro Discharge Machining process (micro-EDM). Nanofluids are synthesised in dielectric fluids such as polar fluid like Deionized water (DI), Deionized water with 4 wt% of Poly-Vinyl Alcohol (DI + PVA), and non-polar fluids like Ethylene Glycol (EG) and Kerosene (KR). Low energy consumption, in-situ nanofluid synthesis, cleaner work environment, non-essential chemical post-processing during the synthesis using micro-EDM are the significant reasons creating broad scope for this process exploration. To understand the process, theoretical approach is explored to study the effect of dielectric fluids on particle formation mechanism, critical radius and nucleation rate of nanoparticles. In the experimental approach, silver nanoparticles are generated and characterized for the particle concentration, morphology and size distributions in all four dielectric fluids. High Resolution Scanning Electron Microscopy (HRSEM), Dynamic Light Scattering (DLS), and UV–Visible spectroscopy (UV–Vis) are used for the study. Nanofluid's decomposition temperatures and latent heat of vaporization are investigated using ThermoGravimetric Analysis (TGA) and Differential Scanning Calorimetry (DSC), respectively. Particles generated in DI + PVA fluid found to be smaller mean size of (30.06 ± 1.12) nm followed KR fluid of (40.32 ± 1.29) nm, EG fluid of (47.85 ± 1.24) nm, and in DI fluid of (149.04 ± 1.93) nm. Also polar liquids yielded wider and non-polar liquids yielded narrower particle distribution. KR nanofluid is thermally stable followed by DI + PVA, DI, and EG nanofluid. With the spark energy of 1.15 mJ, the in-house developed micro-EDM process yielded highest nanoparticles concentration of 2.68 g/L in KR fluid followed by DI + PVA fluid of 2.13 g/L, DI fluid of 2.09 g/L and least by EG fluid of 1.04 g/L. © 2020 The Society of Powder Technology Japan