Here, starch functionalized silver nanoparticles (AgNPST) with a size range of 2-10 nm were synthesized using starch as a reducing as well as surface capping agent. Nanoparticles were characterized for shape, hydrodynamic size, and stability by standard techniques such as electron microscopy, dynamic light scattering as well as zeta potential analysis. Nanoparticles exhibited localized surface plasmon resonance at 402 nm and fluorescence peaks in the range of 400-680 nm, when excited at 350 nm. We demonstrated that when AgNPST interacted with six different heavy metals (Cu2+, Ni2+, Zn2+, Pb2+, Hg2+, and As5+), it exhibited different extent of surface plsamon resonance shift. However, Hg2+ showed the maximum SPR shift as well as concentration dependent visible yellow color in a concentration range of 1-10 ppm. The analysis of reactive oxygen species (ROS) by fluorescence, localized surface plasmon resonance, and colorimetric assay revealed that AgNPST were able to detect and quantify cellular (E. coli) ROS as well as in vitro H2O2. Our results, thus evidenced that AgNPST might be used as a multifunctional sensor to detect toxic metal such as Hg2+ and free oxygen radical in biological milieu as well as H2O2 in vitro condition.