The green synthesis of silver nanoparticles (AgNPs) has currently been gaining wide applications in the medical field of nanomedicine. Green synthesis is one of the most effective procedures for the production of AgNPs. The Diospyros malabarica tree grown throughout India has been reported to have antioxidant and various therapeutic applications. In the context of this, we have investigated the fruit of Diospyros malabarica for the potential of forming AgNPs and analyzed its antibacterial and anticancer activity. We have developed a rapid, single-step, cost-effective and eco-friendly method for the synthesis of AgNPs using Diospyros malabarica aqueous fruit extract at room temperature. The AgNPs began to form just after the reaction was initiated. The formation and characterization of AgNPs were confirmed by UV-Vis spectrophotometry, XRD, FTIR, DLS, Zeta potential, FESEM, EDX, TEM and photoluminescence (PL) methods. The average size of AgNPs, in accordance with TEM results, was found to be 17.4 nm. The antibacterial activity of the silver nanoparticles against pathogenic microorganism strains of Staphylococcus aureus and Escherichia coli was confirmed by the well diffusion method and was found to inhibit the growth of the bacteria with an average zone of inhibition size of (8.4 ± 0.3 mm and 12.1 ± 0.5 mm) and (6.1 ± 0.7 mm and 13.1 ± 0.5 mm) at 500 and 1000 µg/mL concentrations of AgNPs, respectively. The anticancer effect of the AgNPs was confirmed by MTT assay using the U87-MG (human primary glioblastoma) cell line. The IC50 value was found to be 58.63 ± 5.74 μg/mL. The results showed that green synthesized AgNPs exhibited significant antimicrobial and anticancer potency. In addition, nitrophenols, which are regarded as priority pollutants by the United States Environmental Protection Agency (USEPA), can also be catalytically reduced to less toxic aminophenols by utilizing synthesized AgNPs. As a model reaction, AgNPs are employed as a catalyst in the reduction of 4-nitrophenol to 4-aminophenol, which is an intermediate for numerous analgesics and antipyretic drugs. Thus, the study is expected to help immensely in the pharmaceutical industries in developing antimicrobial drugs and/or as an anticancer drug, as well as in the cosmetic and food industries.