In recent years, inorganic metal nanoparticle fabrication by extraction of a different part of the plant has been gaining more importance. In this research, cellulose-mediated Ag nanoparticles (cellulose/Ag NPs) with excellent antibacterial and antioxidant properties and photocatalytic activity have been synthesized by the microwave-assisted hydrothermal method. This method is a green, simple, and low-cost method that does not use any other capping or reducing agents. X-ray diffraction (XRD), Fourier transform infrared (FTIR), field emission scanning microscopy (FESEM), transmission electron microscopy (TEM), energy-dispersive X-ray (EDX), and UV−visible spectroscopic techniques were used to investigate the structure, morphology, as well as components of the generated cellulose/Ag NPs. In fact, XRD results confirm the formation of the face-centered cubic phase of Ag nanoparticles, while the FTIR spectra showed that the synergy of carbohydrates and proteins is responsible for the formation of cellulose/Ag NPs by the green method. It was found that the green-synthesized silver nanoparticles showed good crystallinity and a size range of about 20−30 nm. The morphology results showed that cellulose has a cavity-like structure and the green-synthesized Ag NPs were dispersed throughout the cellulose polymer matrix. In comparison to cellulose/Ag NPs and Ag nanoparticles, cellulose/Ag NPs demonstrated excellent antibacterial activity, Proteus mirabilis (MTCC 1771) possessed a maximum inhibition zone of 18.81.5 mm at 2.5 g/mL, and Staphylococcus aureus (MTTC 3615) had a minimum inhibition zone of 11.30.5 mm at 0.5 g/mL. Furthermore, cellulose/Ag NPs also exhibited a significant radical scavenging property against the DDPH free radical, and there was a higher degradation efficiency compared to pure Ag NPs against Rhodamine B as 97.38% removal was achieved. Notably, cellulose/Ag NPs remarkably promoted the transfer and separation of photogenerated electron−hole (e − /h + ) pairs, thereby offering prospective application of the photodegradation efficiency for Rhodamine B (RhB) as well as antibacterial applications. With the findings from this study, we could develop efficient and environmentally friendly cellulose/Ag nanoparticles using low-cost, environmentally friendly materials, making them suitable for industrial and technological applications.