This study reports the rapid preparation of silver nanoparticles (AgNPs) from Tollens' reagent under microwave irradiation. In the synthesis, lignin with reducing groups and spatial three-dimensional structure was used as reducing and stabilizing agents without other chemical reagents, and the effects of the ratio of lignin to Ag(+), reaction temperature, and heating time on the synthesis of AgNPs were investigated. The obtained AgNPs were further characterized by UV-vis, Malvern particle size, TEM, XRD, and XPS analyses. The structural changes of lignin before and after reaction were also studied by FT-IR, (1)H NMR, (13)C NMR, and GC-MS. The results revealed that the obtained AgNPs were mostly spherical with diameters of around 24 nm. The optimum reaction conditions were a ratio 50 mg of lignin to 0.3 mM of Ag(+), a microwave irradiation temperature of 60 °C, and a heating time of 10 min. Moreover, AgNPs redispersed well in water and ethanol after centrifugation for the removal of lignin. During the formation of AgNPs, lignin was oxidized, and the side chains of lignin were partly disrupted into small molecules, such as hydrocarbon and alcohol. The resultant lignin-AgNPs showed highly selective sensing detection for Hg(2+), and the color of the lignin-AgNP solution containing Hg(2+) decreased gradually with increasing amounts of Hg(2+) within seconds, but the other 19 metal ions had little effect on the color and surface plasmon absorption band of the lignin-AgNPs. Also, there was a linear relationship between the absorbance and Hg(2+) concentration, with a limit of detection concentration of 23 nM. This study provides not only a new way to take advantage of agricultural and forestry residues, but also a green and rapid method for the synthesis of AgNPs to detect the toxic ion Hg(2+) selectively and sensitively.