The promising therapeutic implications of nanoparticles have spurred their development for biomedical applications. An eco-friendly methodology synthesizes gold nanoparticles using Cordyceps militaris, an edible mushroom (Cord-Au-NPs), using a quality-by-design approach (central composite design). UV-visible spectroscopy analysis revealed an absorption peak at 540–550 nm, thus confirming the synthesis of gold nanoparticles. Cord-Au-NPs have a crystalline structure, as evidenced by the diffraction peaks. The zeta potential value of −19.42 mV signifies the stability of Cord-Au-NPs. XRD study shows gold facets and EDX analysis revealed a strong peak of spherical nanoparticles in the gold region with a mean particle size of 7.18 nm and a polydispersity index of 0.096. The obtained peaks are closely associated with phenolic groups, lipids, and proteins, as examined by FTIR, suggesting that they function as the reducing agent. Cord-Au-NPs exhibited dose-dependent antioxidant, antidiabetic, and antibacterial activity. The method is eco-friendly, nontoxic, less time-consuming, and does not use synthetic materials, leading to higher capabilities in biomedical applications.