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Nanoparticles exhibit completely new or improved properties based on specific characteristics such as size, distribution and morphology, if compared with larger particles of the bulk material they are made of. Production of nanoparticles can be achieved through different methods. In this paper stable silver nanoparticles have been synthesized by using Cynodon dactylon (Arugampul) plant extract as both the reducing and stabilizing agents. The morphology and size distribution of prepared silver nanoparticles varied with the concentration of the Cynodon dactylon extract used. The UV-Vis spectrum of silver nanoparticle in aqueous solution shows an absorbance peak around 420 nm due to Surface plasmon resonance. The X-ray diffraction analysis revealed the face-centered cubic (fcc) geometry of silver nanoparticles. The formation and stabilization of the nanoparticle is confirmed by HRTEM analysis. EDAX analysis was used to identify the presence of silver. Thermo gravimetric Analysis (TGA) measures the weight loss of silver nanoparticles as a function of temperature under a controlled atmosphere. The Silver nanoparticles displayed efficient antimicrobial activity towards most of the tested fungal and bacterial cultures. The cytotoxicity of the prepared silver nanoparticles was investigated using a cancer cell line.