Extracellular biosynthesis of silver nanoparticles by Aspergillus niger isolated from soil is being reported in the present paper. The production of silver nanoparticles was evidenced by UV-vis spectrum, showing the absorbance at 420 nm (Perkin Elmer Lambda-25). The nanoparticles characterized by Transmission Electron Microscopy exhibited spherical silver nanoparticles with diameter of around 20 nm. Elemental Spectroscopy imaging showed the presence of fungal protein around the silver nanoparticles thereby increasing their stability in the suspension. The silver nanoparticles (10 mu g/ml) showed remarkable antibacterial activity against gram-positive (Staphylococcus. aureus) and gram-negative (Escherichia coli) bacteria. The reduction of the silver ions might have occurred by a nitrate-dependent reductase enzyme and a shuttle quinone extracellular process. Reduction of silver ions was an extracellular and rapid process; this knowledge may lead to the development of an easy process for biosynthesis of the silver nanoparticles. Potential of fungal-mediated biosynthesis of silver nanoparticles is important for development of effective antibacterial agents showing resistance to drugs available in the market.23243247