Polyvinylpyrrolidone (PVP) is employed in several potential applications, relying of its special chemical and physical properties in addition to its low toxicity and biocompatibility. The aim of this work is to prepare polyvinylpyrrolidone-silver (PVP-Ag) nanocomposite with high inhibiting effect on the microbial growth and low cytotoxicity. In situ prepared small stable spherical silver nanoparticles, with narrow range particle size distribution, were obtained by easy, economical and rapid chemical reduction method. Silver ions were reduced to silver nanoparticles using low amount of sodium borohydride (NaBH4) as a strong reducing agent. PVP-Ag nanocomposite was prepared using PVP as a stabilizing and capping agent. Formation of the spherical silver nanoparticles with mean particle size 5 nm was confirmed by ultraviolet-visible spectroscopy, high resolution transmission electron microscopy, and dynamic light scattering. The inhibiting growth effect of the nanocomposite toward Gram-positive bacteria (Staphylococcus aureus), Gram-negative bacteria (Pseudomonas aeruginosa), and yeast fungus (Candida albicans) were studied. The cytotoxicity of the nanocomposite against BJ1 normal skin fibroblast cell line was tested. Results of this work presented perfect antimicrobial activity of the PVP-Ag nanocomposite towards bacteria and fungi with low cytotoxicity, which may lead to promising applications in skin wound healing.