The integration of nanotechnology and green synthesis strategies provides innovative solutions in biomedicine. This study focuses on the biofabrication of silver nanoparticles (AgNPs) using Corynespora smithii, an endophytic fungus isolated from Bergenia ciliata. The eco-friendly synthesis process employed fungal extracts as reducing and stabilizing agents thereby minimizing the need for hazardous chemicals. The AgNPs demonstrated strong potent biological activities, showcasing significant antioxidant, antibacterial, and anticancer properties. The antibacterial efficacy was demonstrated against various Gram-positive and Gram-negative bacteria, while cytotoxicity on the A549 lung cancer cell line revealed an IC₅₀ value of 10.46 µg/mL. A molecular docking analysis revealed interactions between the major bioactive compound, dimethylsulfoxonium formylmethylide, and the pathogenic proteins, Staphylococcus aureus and Salmonella typhi, displaying moderate binding affinities. Furthermore, the ADME analysis of dimethylsulfoxonium formylmethylide indicated favourable pharmacokinetic properties, including high gastrointestinal absorption, minimal lipophilicity, and low potential for drug–drug interactions, making it a promising candidate for oral drug formulations. These findings further support the compound’s suitability for biomedical applications. This research emphasizes the potential of C. smithii as a sustainable source for synthesizing bioactive nanoparticles, paving the way for their application in developing novel therapeutic agents. This study highlights the significance of harnessing endophytic fungi from medicinal plants for sustainable nanotechnology advancements.