Sodium alginate (SA) was used to functionalize the surfaces of silver nanoparticles (AgNPs) to form SA-AgNPs for sensing dimethoate with a rapid and sensitive visual readout. UV–Vis spectrophotometry, Fourier transform infrared spectroscopy, transmission electron microscopy, X-ray photoelectron spectroscopy, and zeta potential measurements were used to characterize SA-AgNPs that were synthesized under the ideal conditions. SA-AgNPs were spherical with an average size of 14.6 nm. The stability of SA-AgNPs was investigated with changes in pH, salinity, and storage time. This colorimetric assay of dimethoate relied on the change in the absorption ratio (A475/A400) of SA-AgNPs, resulting in their aggregation caused by dimethoate, leading to a visual change for SA-AgNPs from yellow to pale yellow. As a result, the absorption ratio (A475/A400) of SA-AgNPs showed good linearity in the range of 0.05 to 2.0 ppm (R2 = 0.9986) with a limit of detection (LOD) of 30 ppb. Adding other pesticides did not significantly change the absorption ratio of SA-AgNPs, indicating its high selectivity as a colorimetric assay. The sensor was successfully used to detect dimethoate in actual water samples.