Gold-silver alloy nanoparticles were synthesized by simultaneous reduction of varying mote fractions of HAuCl4 and AgNO3 by sodium citrate in aqueous solution without using stabilizing agents such as surfactant or polymer. Appearance of single absorption peak in visible spectrum indicated formation of homogeneous gold-silver alloy nanoparticles. Transmission electron micrographs also support formation of alloy nanoparticles rather than core-shell particles. The plasmon absorption bands for Au-Ag nanoparticles show linear bathochromic shift with increasing Au content. No significant change in surface plasmon band was observed on storage of samples at 25 +/- 2 degrees C for 6 months, indicating stability of the particles. Particle size distribution, zeta-potential and conduction of these colloidal suspensions were measured by dynamic light scattering along with Zetasizer. Gold and Au-Ag alloy nanoparticles exhibited fluorescence at 600 nm and in between 600 and 486 nm respectively depending on alloy composition. Gold nanoparticles were used for cell line study using liposome as a carrier. This liposome entrapped gold nanoparticles showed enhanced uptake by Chinese Hamster Ovary (CHO) cells compared to gold nanoparticles. (C) 2008 Elsevier B.V. All rights reserved.