Due to unique physicochemical properties, magnesium oxide nanoparticles (MgO NPs) have shown great potential for various applications, including biomedical and environmental remediation. Moreover, the physiochemical properties of MgO NPs can be tailored by metal ion doping that can be utilized in photocatalytic performance and in the biomedical field. There is limited study on the photocatalytic activity and biocompatibility of silver (Ag)-doped MgO NPs. This study was planned for facile synthesis, characterization, and photocatalytic activity of pure and silver (Ag)-doped MgO NPs. In addition, cytotoxicity of pure and Ag-doped MgO NPs was assessed in human normal umbilical vein endothelial cells (HUVECs). Pure MgO NPs and Ag-doped (1, 2, 5, and 7.5 mol%) MgO NPs were prepared via a simple sol-gel procedure. X-ray diffraction (XRD), scanning electron microscopy (SEM), transmission electron microscopy (TEM), Fourier transform infrared (FTIR), photoluminescence (PL), and X-ray photoelectron spectroscopy (XPS) were used to characterize the prepared samples. XRD results showed the preparation of highly crystalline NPs with no impurity peaks. TEM and SEM studies indicate smooth surfaces with almost spherical morphology of MgO NPs, and Ag-doping did not change the morphology. Elemental composition study suggested that Ag is uniformly distributed in MgO particles. Intensity of the PL spectra of MgO NPs decreased with increasing the concentration of Ag dopants. In comparison to pure MgO NPs, Ag-MgO NPs showed higher degradation of methylene blue (MB) dye under UV irradiation. The improved photocatalytic activity of Ag-MgO NPs was related to the effect of dopant concentration on reducing the recombination between electrons and holes. Cytotoxicity studies showed good biocompatibility of pure and Ag-doped MgO NPs with human normal umbilical vein endothelial cells (HUVECs). These results highlighted the potential of Ag-doped MgO NPs in environmental remediation.