In this study, a green and highly efficient method was proposed to synthesize nano-silver chloride (nano-AgCl) by using spent mushroom substrate (SMS) extract as a cheap reactant. Nanoparticles were characterized by a series of techniques like X-ray diffraction (XRD), energy dispersive spectroscopy (EDS), scanning electron microscopy (SEM), and transmission electron microscopy (TEM), which showed the formation of near-spherical silver chloride nanoparticles with an average size of about 8.30 nm. Notably, the synthesized nano-silver chloride has a more prominent antibacterial effect against Ralstonia solanacearum (EC50=5.18 mg/L) than non-nano-sized silver chloride particles, nano-silver chloride synthesized by chemical method, and commercial pesticides. In-depth, the study of mechanism revealed that nano-silver chloride could cause cell membrane disruption, DNA damage and intracellular generation of reactive oxygen species (•OH, •O2- and 1O2) leading to peroxidation damage in Ralstonia solanacearum (R. solanacearum). And the reaction between nano-silver chloride and bacteria could be driven by intermolecular forces instead of electrostatic interactions. Our study provides a new approach to synthesizing nano-silver chloride as a highly efficient antibacterial agent and broadens the utilization of agricultural waste spent mushroom substrate.