Nanoparticles have gained considerable attention as important platforms in pharmaceutical and biomedical research due to their size, morphology, surface chemistry, and colloidal behavior, which can affect drug delivery, antimicrobial activity, diagnostics, imaging, and therapeutic performance. However, conventional chemical and physical synthesis routes may require hazardous reagents, high energy demands, and procedures that raise environmental, safety, and scalability concerns. In this context, biologically mediated synthesis has emerged as an approach in which plants, microorganisms, including fungi and algae, and isolated biomolecules contribute to nanoparticle formation by acting as reducing, capping, and stabilizing agents. This narrative review evaluates these routes as potential green strategies, covering formation principles, biological sources, nanoparticle classes, characterization challenges, pharmaceutical applications, comparison with conventional synthesis, and limitations. The reviewed evidence indicates that the composition of biological sources and reaction conditions can shape nanoparticle size, morphology, surface chemistry, stability, and biological activity, highlighting green synthesis as a design-dependent process rather than a simple substitute for chemical reducing agents. Integrated characterization using optical, spectroscopic, diffraction, microscopic, and colloidal techniques is essential for interpreting nanoparticle identity and reproducibility. Biologically mediated nanoparticles show experimental and preclinical potential in drug delivery, antimicrobial therapy, anticancer research, biosensing, imaging, and diagnostics; however, most evidence remains preclinical and model-dependent. Translation remains limited by source variability, batch inconsistency, scale-up and purification challenges, stability, incomplete safety evidence, and regulatory uncertainty. Progress will require standardized process control, comparative life cycle and techno-economic assessment, scalable manufacturing, and rigorous pharmacokinetic, biodistribution, toxicological, and regulatory validation.