Large scale synthesis of nanoparticles requires their simultaneous synthesis and separation. In this work, we establish a framework for simultaneous synthesis and separation of nanoparticles based on an environmentally benign aqueous two-phase system (ATPS) and illustrate the proof of concept in the synthesis of silver nanoparticles. For this, the ATPS was prepared using polyethylene glycol and trisodium citrate dihydrate. These components act as reducing agents and can be used for nanoparticle synthesis at ambient temperature (∼30 °C). The concentration of the reducing agents in the ATPS is maintained relatively high to ensure the formation of two phases. Nanoparticle synthesis at these high concentrations is achieved using sodium hydroxide as a catalyst. The proclivity of the nanoparticles to adsorb at the liquid-liquid interface is explored and exploited to separate them as they are synthesized. The novel green synthesis and separation technique proposed here is shown to have a significant potential for the synthesis of nanoparticles on a large scale. The unspent reagents in the reaction can be effectively recycled and reused. Copyright © 2020 American Chemical Society.