Mushrooms are of great interest in nanotechnology. Antibiotics resistance is a serious condition that threatens the treatment of many diseases caused by bacteria. So, it becomes persistent to find new antibacterial agents. Silver nanoparticles (AgNPs) showed a good antibacterial activity and the green synthesis of silver nanoparticles is considered a safe method. In this study AgNPs were biologically synthesized from mycelial free filtrate of an Egyptian mushroom Agrocybe cylindracea. The shift in reaction color from pale yellow to dark brown served as a primary indication for the creation of nanoparticles. The production of AgNPs was further confirmed using UV- visible spectrophotometer and the synthesis process was optimized at different parameters. The best concentration of silver nitrate, pH and temperature values were 4 mM, 7 and 40 °C, respectively. Transmission electron microscopy (TEM), Fourier transform infrared (FTIR), and Zetasizer analyses were used to investigate the characteristics of the produced nanoparticles. TEM studies showed that the size of synthesized AgNPs was 3.47 – 13.99 nm. FTIR studies showed the presence of some functional groups (O-H, C-H and C=C) which might be involved in the reduction of silver nitrate to silver ion and stabilization of nanoparticles. Zeta potential of the nanoparticles was -3.57. Antibacterial activity of synthesized AgNPs was demonstrated against different harmful microorganisms; Staphylococcus aureus, Pseudomonas aeruginosa and Klebsiella pneumoniae and the best antibacterial activity was recorded against P. aeruginosa.