In this study, highly sensitive and specific colorimetric detection technique with silver nanoparticles (Ag NPs) towards mercuric ions was reported. Here, chemical reduction technique was applied for Ag NPs preparation and methylenediphosphonic acid (MDP) acted as a functionalizing agent. The prepared particle was characterized by Ultraviolet–visible spectroscopy, transmission electron microscope, zeta sizer, particle size analyser and EDS. The NPs were spherical shaped and it showed the zeta potential of −37.56 ± 3 mV. The NPs possess hydrodynamic diameter of 8 ± 1.1 nm. In the presence of antioxidant glutathione (GSH), reported probe shows nano-molar level Hg(II) ions detection. The probe was found to be yellow colour due to its surface Plasmon resonance and the disappearance of yellow colour of the probe was observed with increasing Hg(II) concentrations. An excellent linearity was noticed between concentrations of Hg(II) from 20 to 100 nM and the absorbance at 396 nm. The lowest detectable limit of the probe was determined to be 8 nM. The sensing ability of probe was not much influenced by different pH, temperature and saline content. Other metal ions didn't interfered with Hg(II) ions sensing by the probe. Environmental sample collected from Noyyal Orathuppalayam Dam and Reservoir was analysed by using the probe and amount of Hg(II) was to estimated to be 124 nM. This assay can be used in colorimetric way of quantitative and qualitative determination of Hg(II) from water samples.