Formation of silver nanoparticles in the course of chemical reduction of AgNO₃ with arabinogalactan in aqueous alkaline solution was studied by electronic absorption spectroscopy and X-ray diffraction analysis. The pH of the solution was found to be the major factor affecting the degree of reduction of Ag⁺ ions. The probable reaction mechanism was discussed. Composites containing up to 58% Ag, with the metal particle size of 7–16 nm, were prepared. The nanoparticle size can be controlled by varying the reactant ratio AgNO₃: arabinogalactan. Chemical modification of arabinogalactan was confirmed by IR and ¹³C NMR spectroscopy and by TLC.