This study presents the synthesis and characterization of ICNOD, a highly selective chemosensor for detecting Ag+ ions in environmental and biological samples. ICNOD was synthesized by reacting n-phenyl-o-phenylenediamine with 1-isocyanate naphthalene in absolute ethanol, yielding a novel chemosensor. Fluorescence studies revealed ICNOD’s exceptional selectivity for Ag+ ions over other common metal ions, making it a promising detection tool. Competitive complexation experiments showed a strong affinity of ICNOD for Ag+ ions, with a 1:2 binding stoichiometry, highlighting its potential for sensitive detection. The detection mechanism involves a combination of Photoinduced Electron Transfer (PET OFF) and Intramolecular Charge Transfer (ICT ON), enabling selective Ag+ ion detection. The binding constant (Ka) of ICNOD for Ag+ ions was determined to be 3 × 10−2 M−1 using the Benesi-Hildebrand technique, with limits of detection (LOD) and quantification (LOQ) of 2.87 nM and 8.70 nM, respectively. Molecular modeling using DFT provided valuable insights into ICNOD’s structural features and its interaction with Ag+ ions, supporting the experimental findings. Spectroscopic techniques, including FT-IR, 1H NMR titration, and HR-mass spectroscopy, confirmed the binding interactions between ICNOD and Ag+ ions. Fukui function analysis identified potential binding sites within ICNOD for Ag+ ions, further elucidating the detection mechanism. The practical applicability of ICNOD was successfully demonstrated through real sample analysis, paper strip tests, and bioimaging, showcasing its potential for real-world applications.