This work reports an eco-friendly synthesis of silver nanoparticles (AgNPs) using endophytic bacteria, Cytobacillus firmus isolated from the stem bark of Terminalia arjuna. The synthesis of AgNPs was confirmed by visual observation as a change in color of the bacterial solution impregnated with silver. Further, the morphology of the AgNPs, average size, and presence of elemental silver were characterized by UV–Visible spectroscopy, scanning electron microscopy, and dynamic light scattering spectroscopy. The roles of endophytic secondary metabolites in the metal reduction, stabilization, and capping of silver nanoparticles were studied by qualitative FTIR spectral peaks. The antimicrobial ability of AgNPs was evaluated against Gram-positive (Staphylococcus aureus) and Gram-negative (Escherichia coli) bacteria and pearl millet blast disease-causing fungi (Magnoporthe grisea). The biosynthesized AgNPs showed good antibacterial and antifungal activities. AgNPs effectively inhibited the bacterial growth in a dose-dependent manner and presented as good antifungal agents towards the growth of Magnoporthe grisea.