The present work describes the impact of the structural diversity of different carbohydrate molecules on the morphology and sensing ability of silver nanoparticles synthesized by a green protocol using Ocimum sanctum leaf extract, used as the reducing agent. Seven different monosaccharides were utilized as capping and stabilizing agents during the green synthesis of silver nanoparticles. The carbohydrate-capped nanoparticles were more stable in solution than the uncapped counterpart for at least three months. The formation and stability of the silver nanoparticles were analyzed using UV-visible, fluorescence spectroscopy, and X-ray diffraction studies, whereas the morphological characteristics were studied using scanning electron microscopic analysis. The different types of interaction of sugar molecules with silver atoms were studied using DFT calculation. Silver nanoparticles synthesized using d-galactose and l-arabinose, having an axial-OH group at the C-4 position, were found to have the smallest size with maximum efficacy as chemosensors for toxic mercury (II) ions in aqueous medium. The green silver nanoparticles were successfully employed as antimicrobial agents against different gram-positive and gram-negative bacteria. The catalytic activity of silver nanoparticles in the degradation of organic dyes was also evaluated for Congo red, methyl orange and reactive blue in the presence of sodium borohydride. The nanoparticles showed excellent dye degradation activity with a minimum time duration.