The purpose of this study was to synthesize a new magnetic material with antimicrobial properties, incorporated into a biopolymer and containing silver nanoparticles (Ag NP) prepared extract of Eugenia umbelliflora as a reducing agent. Silver nanoparticles incorporated into magnetic nanocomposite O-carboxymethylchitosan/y-Fe2O3/Ag0 (CMAgE) composite were synthesized using an extract of E. umbelliflora. The antimicrobial activity of the pathogenic microorganism is reported here. The synthesized nanoparticles were also characterized, and quantified by Ag analysis. The minimum inhibitory concentrations (MIC) of CMAgE against Staphylococcus aureus, Escherichia coli, and Candida albicans were 16.5, 1000 and 500 μg/mL, respectively. The results show that these materials have significant synergistic effect on each other. The potential phytotoxic effect of the nanocomposites was evaluated using Cucumis sativus seeds. The positive values for seedling elongation inhibition (SEI) show that CMAgE and methanol extract of Eugenia umbelliflora (Eug) cause growth inhibition at a concentration of 1000 mg/L. The germination index (GI) values of 40% and 80% at 1000 mg/L, for CMAgE and Eug, respectively, showed inhibition of germination. CMAgE and Eug showed cytotoxic effects against Artemia salina nauplii, with LC50 values of 72.5 μL/mL and < 5.0 μL/mL respectively, after 48 h.