Fifty fungal isolates (filamentous and uni cellular) were screened for their ability to reduce sodium selenite (Na₂Seo₃). Out of those, twenty eight isolates displayed positive results therefore they were screened for their ability to tolerate higher concentrations of sodium selenite for different incubation periods. The most active three isolates were characterized morphologically and physiologically. They were identified as Fusarium oxysporum, Rhodotorula mucilaginosa and Cryptococcus albidus based on 18S RNA encoding gene. The selenium reduction power by Fusarium oxysporum decreased by increasing the selenite concentration, where it reached the maximum value 96.6% of 1mM concentration of sodium selenite with the net dry weight 7.7 mg/ml. However, the reduction power of Rhodotorula mucilaginosa and Cryptococcus albidus reached the maximum value 99 and 98.8% of 5 and 7mM of sodium selenite with the net dry weight 7.2 and 6.6 mg/ml respectively. It was found that F. oxysporum reduced selenite extra cellular while both R. mucilaginosa and C. albidus reduced it intra cellular. The biosynthesized selenium particles were purified and dried at 40°C, and characterized using UV- Vis spectroscopic, Transmission electron microscopy and Fourier- Transform infrared Spectroscopy (FTIR) analysis; this is to confirm the selenium nanoparticles (Se-NPs) formation. Transmission electron microscopic images explained the formation of monodisperse spherical-selenium nanoparticles in the range of 14 –97 nm with spherical shape. In addition, the resonance peak appeared at 200- 300 nm which corresponds to the particle size of 14-97 nm. Fourier transform infrared spectroscopy confirmed the presence of a protein shell outside the nanoparticles.