In recent times, the investigation and development of multifunctional textiles have become a necessity for the textile and apparel industries. Therefore, this paper explores an innovative approach to enhancing the functional properties of cotton (cellulosic) fabric by integrating advanced technologies to impart oleophobic/hydrophobic, flame-retardant, and antibacterial characteristics. The methodology involves systematically applying chemical treatments utilizing a layer-by-layer finishing technique to achieve the desired multifunctionality in cotton fabric. Silver nanoparticles and a phosphorus-nitrogen-based synergistic flame-retarding agent were employed to finish the fabric. Performance testing encompasses evaluating bacterial reduction, contact angle measurements, water absorption properties, flame-retardant capabilities, and Limiting Oxygen Index (LOI). Characterization techniques such as FTIR, SEM, and EDX analysis, were carried out to assess structural and chemical modifications of the material. The results illustrate a notable transformation of the cellulosic fabric, showcasing enhanced resistance to bacterial attack, improved stain resistance, and heightened flame-retardant performance, without compromising its color indices and air permeability. The fabric retains these multifunctional attributes even after 20 cycles of laundering, which confers durability. The implications of this research extend the application of conventional cotton fabric in diverse sectors, including apparel, home furnishings, and industrial textiles.