The aim of the study was to synthesize silver nanoparticles by using filamentous fungus Penicillium sp. The fungal culture was isolated from the soil samples collected from agriculture fields in Vellore district, Tamil Nadu, India. The purified fungal isolates were inoculated in minimal medium and incubated at room temperature for three days. For the synthesis of silver nanoparticles, 50 ml of cell filtrate was mixed with equal volume of 1mM silver nitrate [AgNO3 (1 mM)] and agitated at room temperature in dark. The synthesis of silver nanoparticles was investigated by UV-Vis spectroscopy, Atomic force microscopy and Fourier Transform Infrared Spectroscopic analysis. Results indicate the synthesis of silver nanoparticles in the reaction mixture. Mechanism of silver nanoparticles synthesis was determined by nitrate reduction test.