In the present investigation, synthesis of silver nanoparticles (AgNPs) has been successfully carried out in a very simple and cost-effective manner by reducing Ag+ ions in sodium alginate solution and further stabilizing the colloidal mixture with gelatin solution. The ultraviolet-visible (UV-vis) spectra were in excellent agreement with the nanostructure morphology obtained from dynamic light scattering transmission electron microscopy and their size distributions. Increase in precursor concentration was found to promote agglomeration of AgNPs. Antibacterial assays revealed that the nanoformulations were more active against Gram-negative bacteria. Swelling studies of the hydrogel films demonstrated a rapid increase in water uptake. However, an increase in swelling % was observed with decreasing AgNP content. The use of biocompatible materials such as sodium alginate and gelatin not only provides green and economic attributes to this piece of research work but, at the same time, also opens up possibilities of using the nanoformulations in wound dressings, active packaging and several other biomedical applications.