Antibiotic-resistance and bacterial bioburden are the threats to wound healing. Nanoparticles are a revolutionary advancement in nanomedicine owing to their antibacterial properties, to be used as a promising alternative to antibiotics. A wound dressing with antibacterial and anti-biofilm effects may be a plausible strategy in curbing wound exacerbation caused by bacterial infection. Silver nanoparticles (AgNPs) are known for their excellent antibacterial activity. In present study, biosynthesized AgNPs using spent mushroom substrate (SMS) as reducing agent while chitosan as stabilizing agent were successfully produced. The nanoparticles exhibited considerable antibacterial and anti-biofilm activities with higher sensitivity towards Gram-negative bacteria. These AgNPs were later incorporated into genipin-crosslinked gelatine hydrogels as a wound dressing. The hydrogels were characterized for their physical, rheological and swelling properties, besides in vitro release of AgNPs. The formulated hydrogels demonstrated an adequate release of the AgNPs with acceptable physical, rheological and swelling properties, suitable as a vehicle for wound drug delivery. The antibacterial and anti-biofilm of the hydrogels against Staphylococcus aureus, Bacillus subtilis, Pseudomonas aeruginosa and Escherichia coli were effective in inhibiting the growth of the selected bacteria with minimum inhibitory concentration (MIC) of 63 μg/mL. In summary, genipin-crosslinked gelatine hydrogels loaded with the AgNPs are a promising anti-microbial wound dressing, a potential strategy for combating biofilm of wound infections and accelerating healing.