Algal-mediated synthesis of nanoparticles (NPs) opens the horizon for green and sustainable synthesis of NPs that can be used in many fields, such as medicine and industry. We extracellularly synthesized silver NPs (Ag-NPs) using the novel microalgae Planophila laetevirens under optimized conditions. The isolate was collected from freshwater/soil, purified, morphologically identified, and genetically identified using light, inverted light, scanning electron microscopy, and 18S rRNA sequencing. The phytochemicals in the algal extract were detected by GC−MS. Aqueous biomass extracts and cell-free media were used to reduce silver nitrate to Ag-NPs. To get small, uniformly shaped, and stable Ag-NPs, various abiotic parameters, including precursor concentration, the ratio between the reductant and precursor, temperature, time of temperature exposure, pH, illumination, and incubation time, were controlled during the synthesis of Ag-NPs. B-P@ Ag-NPs and S-P@Ag-NPs (Ag-NPs synthesized using biomass and cell-free medium, respectively) were characterized using UV−vis spectroscopy, transmission electron microscopy, scanning electron microscopy, energy-dispersive X-ray analysis (EDX) and mapping, Fourier transform infrared (FTIR) spectroscopy, and a zeta sizer.