An array of physical, chemical and biological methods have been used to synthesize nanomaterials. In order to synthesize noble metal nanoparticles of particular shape and size specific methodologies have been formulated. Although ultraviolet irradiation, aerosol technologies, lithography, laser ablation, ultrasonic fields, and photochemical reduction techniques have been used successfully to produce nanoparticles, they remain expensive and involve the use of hazardous chemicals. Therefore, there is a growing concern to develop environment-friendly and sustainable methods. Since the synthesis of nanoparticles of different compositions, sizes, shapes and controlled dispersity is an important aspect of nanotechnology new costeffective procedures are being developed. Microbial synthesis of nanoparticles is a green chemistry approach that interconnects nanotechnology and microbial biotechnology. Biosynthesis of gold, silver, gold-silver alloy, selenium, tellurium, platinum, palladium, silica, titania, zirconia, quantum dots, magnetite and uraninite nanoparticles by bacteria, actinomycetes, fungi, yeasts and viruses have been reported. However, despite the stability, biological nanoparticles are not monodispersed and the rate of synthesis is slow. To overcome these problems, several factors such as microbial cultivation methods and the extraction techniques have to be optimized and the combinatorial approach such as photobiological methods may be used. Cellular, biochemical and molecular mechanisms that mediate the synthesis of biological nanoparticles should be studied in detail to increase the rate of synthesis and improve properties of nanoparticles. Owing to the rich biodiversity of microbes, their potential as biological materials for nanoparticle synthesis is yet to be fully explored. In this review, we present the current status of microbial synthesis and applications of metal nanoparticles.