Silver nanoparticles are nanoparticles of silver which are in the range of 1 and 100 nm in size. Silver nanoparticles are used in antimicrobial agents, textile industries, water treatment, sunscreen lotions etc. Biological synthesis of silver nanoparticles using microorganisms has received profound interest because of their potential to synthesize nanoparticles of various size, shape and morphology. In this study, a simple biological and low cost approach for preparation of stable silver nanoparticles by reduction of silver nitrate solution with a bioreduction method using Pseudomonas aeruginosa has been reported. Silver nanoparticles were found to have antibacterial activity against extended spectrum beta lactamase producing organisms like Escherichia coli and Klebsiella pneumoniae. These nontoxic materials which can be prepared in a simple and cost effective manner may be suitable for the formulation of new types of bactericidal materials. Hence it has wide application in medical field.