This study employs a green, eco-friendly and convenient hydrothermal method for the synthesis of stable silver nanoparticles (Ag NPs) using medically beneficial Azadirachta indica A. Juss leaf extract as reducing as well as capping agent. Careful optimization of hydrothermal conditions leads to the formation of spherical Ag NPs of size 9-15 nm. Thus, synthesized NPs are characterized by spectroscopy and microscopy techniques, revealing the morphology and size the NPs. The chemical composition and functionality of the plant extract and NPs is studied using FTIR and EDS analysis. The photocatalytic activity of Ag NPs is demonstrated by decolourization of Rose Bengal under visible light. Ag NPs also show bactericidal activity against E. coli, K. pneumonia, S. epidermidis and S. pneumoniae.