The principle of preparation of silver nanoparticles by using microorganism is a bioreduction process; the silver ions are reduced by the extracellular reductase enzymes produced by the microorganisms to silver metal in nanometer range. It is concluded from protein assay of microorganisms that thereductase involved in bioreduction for preparation of silver nanoparticles is an NADH-dependent reductase. The enzyme reductase gains electrons from NADH and oxidizes it to NAD+. The enzyme is then oxidized by the simultaneous reduction of Silver ions forming silver metal in nanoform. The nanoparticles are formed on the surface of mycelia not in the solution. So the possible mechanism is trapping of the Ag+ ions on the surface of the Actinomycete cells possibly via. Electrostatic interactions between the Ag+ and negatively charged carboxylate groups in enzymes present in the cell wall of mycelia. The silver ions are reduced by enzymes present in the cell wall leading to the formation of the silver nuclei, which subsequently grow by further reduction of Ag+ ions and accumulation on these nuclei. The TEM analysis shows the presence of some silver nanoparticles both in the cytoplasmic membrane and in the cytoplasm [24].It has been studied elsewhere that when metallic nanoparticles are formed they are stabilized by the proteins. Proteins can bind to nanoparticles either through free amine groups or cysteine residues in the proteins [25, 26]. Chemical synthesis results in the formation of yellowish brown colour which results from absorption by colloidal silver nanoparticles in the visible (380-450 nm) region of the electromagnetic spectrum. The colour formation was mainly due to the surface Plasmon resonance of deposited silver nanoparticles and silver nanoparticles exhibit striking colors due to excitation of surface Plasmon vibrations in the particles [27]. In chemical nanoparticle synthesis, a stabilizer is necessary to prevent the aggregation of fine particles to make them stable for a long period of time but with use of biological systems, it is clear from theTransmission electron spectroscopy study that even aggregated nanoparticles don„t have direct contact with one another. This is due to the fact that nanoparticles are stabilized in solution by capping proteins, which are secreted from microorganisms. One important enzyme that may be responsible for this is Cytochrome C. The silver nanoparticles formed by this process are quite stable due to capping by bacterial proteins for a period of 5 months at 25°C[28].