A biological and eco-friendly method has been adopted for the synthesis of silver nanoparticles. Biosynthesized silver nanoparticles (BSN) were obtained when AgNO₃ was mixed with Sapindus mukorossi extract (SME) and subjected to microwave irradiation. The SME not only reduced the Ag⁺ to Ag⁰, but also stabilized the silver nanoparticles (AgNPs). The biosynthesis of the silver nanoparticles with a particle size between 35–45 nm has been confirmed by UV-Vis spectroscopy, XRD analysis and HRTEM images with EDS showing the presence of elemental silver at 3 keV. Optimization of the parameters was carried out to get higher amounts of the BSN. For eco-friendly utilization, the BSN was impregnated into chitosan and the resulting nanocomposite hydrogel films (BSNC) were cast by physically blending varying concentrations of the BSN stabilized by the SME and fixed amounts of 2% w/v chitosan solution, sodium bicarbonate as the porogen and glutaraldehyde as the crosslinker. The BSNC-15 nanocomposite hydrogel film which exhibited good water swelling properties was characterized for chemical composition by FTIR spectroscopy; thermal behavior by thermogravimetric analysis and differential thermogravimetric curves; the surface morphology by AFM and SEM analysis. The versatility of the BSNC film has been assessed for its adsorbing and reducing nature towards Cr(IV), photocatalytic nature which allows it to degrade methyl orange dye, and its antibacterial activity against Staphylococcus aureus and Escherichia coli. Thus cost effective, easily processed BSNC nanocomposite films can be used to degrade Cr(IV) and methyl orange dye from the effluents and in the pharmaceutical field as a wound dressing material owing to its hydrogel and antibacterial nature.