Effect of Silver (Ag) doping in shaping magnetic properties of sol-gel derived TiO2 nanoparticles (NPs) is studied using different characterisation techniques. An interconnection between the results of characterizations and the magnetic behavior of the Ag doped samples has been established. XRD patterns show an anatase to rutile phase transition in NPs at 14 at. % Ag doping. XRD peaks related to metallic Ag are found in the TiO2 NPs containing 10 and 14 at. % Ag whereas secondary phase of Ag2O is noticed in all the samples. FESEM images exhibit the presence of segregated silver clusters attached to the TiO2 nanostructures for 10 and 14 at. % Ag doping. XPS detects the presence of several cationic states in doped TiO2 NPs. UV–Vis measurements reveal that the quantum size effect enhances the band gap at initial level of doping and afterwards it continiously decreases due to sp-d exchange interactions. M − H study shows the emergence of soft ferromagnetism (FM) in the sample doped with a critical Ag+ ion concentration of 5 at. % due to d-orbital mediated spin information transfer between two hole trapped Ag+ ion and a Ti3+ defect leading to the formation of BMP. Temperature dependent FC and ZFC magnetization measurements indicate coexistence of ferromagnetic and antiferromagnetic domains. The investigations culminate in identification of not only the optimum processing conditions for enhanced FM properties along with good physical characteristics but also the probable cause behind the origin of FM in Ag doped TiO2 NPs. Such Ag doped TiO2 NPs can be useful for development of futuristic spintronic and magneto-optical devices.