This study presents the functionalization of organic cotton fabric (OCF) by green synthesized silver nanoparticles (AgNPs). Nontoxic sodium alginate (SA) was utilized as a reducing and stabilizing agent. Scanning electron microscopy (SEM), Fourier transform infrared spectroscopy (FT-IR), X-ray diffraction (XRD), thermogravimetric analysis (TGA), UV–vis spectroscopy, color coordinates, Ag content, and release (%) were used for characterization of the AgNPs and the functionalized OCF. The results reveal that AgNPs were successfully deposited on the surface fibrils of the OCF. Optimistic colors were observed from the treated OCF due to the localized surface plasmon resonance (SPR) of AgNPs. Moreover, studies of mechanical properties in terms of breaking strength and elongation at break (%), crease recovery angle, bending length, and hand-feel were performed, and better results were found in comparison with the control OCF. It was also observed that the presence of AgNPs significantly enhanced the UV resistance and antibacterial activity of the OCF.