The fungi are becoming the distinguished organisms utilized in the biological synthesis of metallic nanoparticles because of their metal bioaccumulation ability. Addressed herein, the extracellular synthesis of silver nanoparticles (AgNPs) was carried out by using the cell‐free filtrate of Penicillium toxicarium KJ173540.1. P. toxicarium was locally isolated and identified using both classical and molecular methods according to ribosomal internal transcribed spacer area of 18S rDNA. The optimum conditions for the AgNPs synthesis were found as 0.25 mM AgNO3 concentrations with pH 12 values at 45°C after 64 hr incubation in dark. Biosynthesized AgNPs were characterized via microscopic and spectroscopic techniques such as transmission electron microscopy, scanning electron microscopy, energy dispersive X‐ray analysis, Fourier transform infrared spectrophotometer, and ultraviolet–visible spectroscopy. Zetasizer measurements presented that the high negative potential value (−18.1 mV) and PDI (0.495) supported the excellent colloidal nature of AgNPs with long‐range stability and high dispersity. AgNPs exhibited cyto–genotoxicity in Allium cepa root meristem cells by decreasing mitotic index and increasing chromosome aberrations in a dose‐dependent manner. Then, 100 and 50% concentration of biosynthesized AgNPs showed antibacterial activity on Staphylococcus aureus and Bacillus subtilis. A decreasing biofilm formation of Pseudomonas aeruginosa 80.69, 48.32, and 28.41% was also observed at 100, 50, and 25% of mycosynthesized AgNP, respectively.