Poly(N‐isopropylacrylamide‐co‐acrylic acid) [p(NiPA‐co‐AAc)] microgel particles were synthesized by free radical precipitation polymerization in aqueous medium. Silver nanoparticles (Ag NPs) were fabricated inside the microgels by in situ reduction method. UV–visible, Fourier transform infrared (FTIR), and dynamic light scattering techniques were used for characterization of pure microgels. The Ag‐p(NiPA‐co‐AAc) hybrid microgels were characterized by UV–visible, FTIR, X‐ray diffraction, and transmission electron microscopy. The hybrid microgel system was used as a catalyst for reduction of 4‐nitroaniline (4‐NA) in aqueous medium. The kinetics of the catalytic reduction of 4‐NA under various conditions of concentration of hybrid microgels, sodium borohydride (NaBH4), and 4‐NA was monitored by UV–visible spectrophotometry. It was found that the value of apparent rate constant (kapp) increases with increase of concentration of NaBH4 and catalyst dosage while it remains constant at various concentrations of 4‐NA. The kinetic data were used to elaborate the conversion of 4‐NA into p‐phenylenediamine on the basis of electron relaying effect of Ag NPs present inside the microgels. POLYM. COMPOS., 39:645–653, 2018. © 2016 Society of Plastics Engineers