Silver nanoparticles developed via biosynthesis are the most fascinating nanosized particles and encompassed with excellent physicochemical properties. The bioinspired nanoparticles with different shapes and sizes have attracted huge attention due to their stability, low cost, environmental friendliness, and use of less hazardous chemicals. This is an ideal method for synthesizing a range of nanosized metal particles from plants and biomolecules. Optical biosensors are progressively being fabricated for the attainment of sustainability by using opportunities offered by nanotechnology. This review focuses mainly on tuning the optical properties of the metal nanoparticles for optical sensing to explore the importance and applications of bioinspired silver nanoparticles. Further, this review deliberates the role of bioinspired silver nanoparticles (Ag NPs) in biomedical, agricultural, environmental, and energy applications. Profound insight into the antimicrobial properties of these nanoparticles is also appreciated. Tailor-made bioinspired nanoparticles with effectuating characteristics can unsurprisingly target tumor cells and distribute enwrapped payloads intensively. Existing challenges and prospects of bioinspired Ag NPs are also summarized. This review is expected to deliver perceptions about the progress of the next generation of bioinspired Ag NPs and their outstanding performances in various fields by promoting sustainable practices for fabricating optical sensing devices.