Silver Nanoparticles were synthesized by Escherichia coli using Silver nitrate in the growth medium and characterized in X-Ray Diffraction, UVVis Spectrophotometer and Scanning Electron Microscope. They exhibited antimicrobial activity against human pathogens except Escherichia Coli. Nanoparticles were impregnated in yarn and analyzed for their inhibition in the broth culture. The Minimal Inhibitory Concentratio was calculated for the human pathogens in Microtitre plate. The toxicity assessment of the nanoparticles in the embryonic Zebrafish showed many organogensis deformities like cardiac malformations, eye and head edema, tail and trunk flexure were observed in the organ system of the developing embryos for 1 to 5 day post fertilization in different concentrations of Ag Nanoparticles. The Organogenesis disruptive effects were found in 14 -20 ng/ml of silver nanoparticles but the inhibition was found in 4-10ng/ml for the pathogens in vitro and 10ng/ml in embryos. Nevertheless, in Cardiac assay, the Heart Beat rates were calculated as 42 -45 for 15 Sec in the concentrations ranging from 10 -20 ng/ml of Silver nanoparticles. The blood flows, rhythmicity, contractility of heart beat rates were observed normal. The Mean value of blood Cell counting did not showed any notable effects in the Nanoparticle treated Zebrafish embryos and control. The LC50 value for the Biosynthesized nanoparticle was at 22 ng/ml in all the developmental stages of the embryos. Our results shows silver nanoparticles disrupts the normal organogenesis during development and further detailed studies are needed to prove silver nanopartcles are an antimicrobial agent for use in humans.