A single step facile synthesis of highly emissive, water-soluble, fluorescent Ag nanoclusters has been reported using a small molecule, dihydrolipoic acid. These clusters were characterized using ultraviolet/visible (UV/vis) spectroscopy, photoluminescence spectroscopy, Fourier transform infrared spectroscopy (FT-IR), high-resolution transmission electron microscopy (HR-TEM), dynamic light scattering (DLS), and X-ray diffraction (XRD) studies. Mass spectrometric analysis shows the presence of a few atoms in nanoclusters containing only Ag4 and Ag5. The reported fluorescent Ag nanoclusters show excellent optical properties, including narrow emission profile, larger Stokes shift (more than 200 nm), and good photostability. Interestingly, these nanoclusters also exhibit semiconducting property. Moreover, as-prepared fluorescent Ag nanoclusters have been utilized as an indicator for selective and ultrasensitive detection of highly toxic HgII ions in water, even at subnanomolar concentrations.