An endophytic fungal strain isolated from the leaves of Gymnema sylvestre was identified as Pestalotiopsis microspora VJ1/VS1 based on nucleotide sequencing of internal transcribed spacer region (ITS 1-5.8S-ITS 2) of 18S rRNA gene (NCBI accession number KX213894). In this study, an efficient and ecofriendly approach has been reported for the synthesis of silver nanoparticles (AgNPs) using aqueous culture filtrate of P. microspora. Ultraviolet-visible analysis confirmed the synthesis of AgNPs by showing characteristic absorption peak at 435 nm. Fourier transform infrared spectroscopy analysis revealed the presence of phenolic compounds and proteins in the fungal filtrate, which are plausibly involved in the biosynthesis and capping of AgNPs. Transmission electron microscopy (TEM) showed that the AgNPs were spherical in shape of 2–10 nm in size. Selected area electron diffraction and X-ray diffraction studies determined the crystalline nature of AgNPs with face-centered cubic (FCC) lattice phase. Dynamic light scattering analysis showed that the biosynthesized AgNPs possess high negative zeta potential value of −35.7 mV. Biosynthesized AgNPs were proved to be potential antioxidants by showing effective radical scavenging activity against 2,2′-diphenyl-1-picrylhydrazyl and H2O2 radicals with IC50 values of 76.95±2.96 and 94.95±2.18 µg/mL, respectively. The biosynthesized AgNPs exhibited significant cytotoxic effects against B16F10 (mouse melanoma, IC50 =26.43±3.41 µg/mL), SKOV3 (human ovarian carcinoma, IC50 =16.24±2.48 µg/mL), A549 (human lung adenocarcinoma, IC50 =39.83±3.74 µg/mL), and PC3 (human prostate carcinoma, IC50 =27.71±2.89 µg/mL) cells. The biosynthesized AgNPs were found to be biocompatible toward normal cells (Chinese hamster ovary cell line, IC50 =438.53±4.2 µg/mL). Cytological observations on most susceptible SKOV3 cells revealed concentration-dependent apoptotic changes that include cell membrane blebbing, cell shrinkage, pyknotic nuclei, karyorrhexis followed by destructive fragmentation of nuclei. The results together in this study strongly provided a base for the development of potential and versatile biomedical applications of biosynthesized AgNPs in the near future.