The biological synthesis of nanocomposites has become cost-effective and environmentally friendly and can achieve sustainability with high efficiency. Recently, the biological synthesis of semiconductor and metal-doped semiconductor nanocomposites with enhanced photocatalytic degradation efficiency, anticancer, and antibacterial properties has attracted considerable attention. To this end, for the first time, we biosynthesized zinc oxide (ZnO) and silver/ZnO nanocomposites (Ag/ZnO NCs) as semiconductor and metal-doped semiconductor nanocomposites, respectively, using the cell-free filtrate (CFF) of the bacterium Lysinibacillus sphaericus. The biosynthesized ZnO and Ag/ZnO NCs were characterized by various techniques, such as ultraviolet-visible spectroscopy, X-ray diffraction, Fourier transform infrared spectroscopy, field emission scanning electron microscopy, transmission electron microscopy, and photoluminescence spectroscopy. The photocatalytic degradation potential of these semiconductor NPs and metal-semiconductor NCs was evaluated against thiazine dye, methylene blue (MB) degradation, under simulated solar irradiation. Ag/ZnO showed 90.4 ± 0.46% photocatalytic degradation of MB, compared to 38.18 ± 0.15% by ZnO in 120 min. The cytotoxicity of ZnO and Ag/ZnO on human cervical HeLa cancer cells was determined using an MTT assay. Both nanomaterials exhibited cytotoxicity in a concentration- and time-dependent manner on HeLa cells. The antibacterial activity was also determined against Gram-negative (Escherichia coli) and Gram-positive (Staphylococcus aureus). Compared to ZnO, Ag/ZnO NCs showed higher antibacterial activity. Hence, the biosynthesis of semiconductor nanoparticles could be a promising strategy for developing hybrid metal/semiconductor nanomaterials for different biomedical and environmental applications.