Selenium nanoparticles (SeNPs) are gaining importance in the field of medicines due to their high surface area and unique properties than their other forms of selenium. In this study, biogenic selenium nanoparticles (B-SeNPs) were synthesized using cyanobacteria and their bioactivities (antioxidant, antimicrobial, anticancer and biocompatibility) were determined for comparison with commercially available chemically synthesized selenium nanoparticles (C-SeNPs). Color change of reaction mixture from sky blue to orange-red indicated the synthesis of biogenic SeNPs (B-SeNPs). UV–Vis spectra of the reaction mixture exhibited peak at 266 nm. During optimization, 30 °C of temperature, 24 h of time and 1:2 concentration ratio of sodium selenite and cell extract represented the best condition for SeNPs synthesis. Various functional groups and biochemical compounds present in the aqueous extract of Anabaena variabilis NCCU-441, which may have possibly influenced the reduction process of SeNPs were identified by FT-IR spectrum and GC–MS. The synthesized cyanobacterial SeNPs were orange red in color, spherical in shape, 10.8 nm in size and amorphous in nature. The B-SeNPs showed better anti-oxidant (DPPH, FRAP, SOR and ABTS assays), anti-microbial (antibacterial and antifungal) and anti-cancer activitities along with its biocompatibility in comparison to C-SeNPs suggesting higher probability of their biomedical application.