Silver nanoparticles are nanoparticles of silver which are in the range of 1 and 100 nm in size. Silver nanoparticles have unique properties which help in molecular diagnostics, in therapies, as well as in devices that are used in several medical procedures. The major methods used for silver nanoparticle synthesis are the physical and chemical methods. The problem with the chemical and physical methods is that the synthesis is expensive and can also have toxic substances absorbed onto them. To overcome this, the biological method provides a feasible alternative. The major biological systems involved in this are bacteria, fungi, and plant extracts. The major applications of silver nanoparticles in the medical field include diagnostic applications and therapeutic applications. In most of the therapeutic applications, it is the antimicrobial property that is being majorly explored, though the anti-inflammatory property has its fair share of applications. Though silver nanoparticles are rampantly used in many medical procedures and devices as well as in various biological fields, they have their drawbacks due to nanotoxicity. This review provides a comprehensive view on the mechanism of action, production, applications in the medical field, and the health and environmental concerns that are allegedly caused due to these nanoparticles. The focus is on effective and efficient synthesis of silver nanoparticles while exploring their various prospective applications besides trying to understand the current scenario in the debates on the toxicity concerns these nanoparticles pose.