Silver nanoparticles (AgNPs) are superior cluster of nanomaterials that are recently recognized for their different applications in various pharmaceutical and clinical settings. The objective of this work deals with novel method for biosynthesis of AgNPs using Azadirachta indica (neem) leaf extract as reducing agent. These bio and chemical synthesized nanoparticles were characterized with the help of UV–vis Spectroscopy, Nanotarc, Dynamic light scattering (DLS), Zeta Potential (ZP), Transmission Electron Microscopy and Fourier transform infrared spectroscopy (FTIR). The obtained results from Nanotrac and TEM revealed that the synthesized AgNPs possess spherical shape with a mean diameter at 94nm for green and 104nm for chemical method, the zeta potential values was −12.02mV for green AgNPs and −10.4mV for chemical AgNPs. In addition, FT-IR measurement analysis was conceded out to identify the Ag⁺ ions reduced from the specific functional groups on the AgNPs, which increased the stability of the particles. Further, we compared the toxicities of green and chemical AgNPs against human skin dermal fibroblast (HDFa) and brine shrimp followed by anticancer activity in NCI-H460 cells. We observed green AgNPs cause dose-dependent decrease in cell viability and increase in reactive oxygen species (ROS) generation. Further, we proved to exhibit excellent cytotoxic effect and induction of cellular apoptosis in NCI-H460 cells. Furthermore, green AgNPs had no significant changes in cell viability, ROS production and apoptotic changes in HDFa cells. In contrary, we observed that the chemical AgNPs possess significant toxicities in HDFa cells. Hence, the green AgNPs were able to induce selective toxicity in cancer cells than the chemical AgNPs. Furthermore, green AgNPs exhibit less toxic effects against human red blood cells and brine shrimp (Artemia salina) nauplii than the chemical AgNPs. It was concluded, that apart from being superior over chemical AgNPs, the green AgNPs are effective and safer to the milieu as they show less toxic effect to normal cells and can be extensively applied in biomedical sciences particularly in cancer field.