Synthesis of silver nanoparticles using α-NADPH-dependent nitrate reductase and phytochelatin in vitro has been demonstrated for the first time. The silver ions were reduced in the presence of nitrate reductase, leading to the formation of a stable silver hydrosol 10–25 nm diam. and stabilized by the capping peptide. The nanoparticles were characterized by X-ray diffraction, transmission electron microscopy, X-ray photoelectron spectroscopy and UV-Vis absorption. These studies will help in designing a rational enzymatic strategy for the synthesis of nanomaterials of different chemical composition, shapes and sizes as well as their separation.