The plasma-liquid interaction (PLI) technique has been employed as a green approach for the synthesis of gold-silver core-shell nanoparticles (Au@AgNPs) using a two-step method. In the first step, the Au seed particles were grown by the PLI technique. Subsequently, the formation of Ag shell was achieved by adding AgNO3 to the solution containing Au seeds and placing it under the atmospheric pressure plasma. The growth of Ag shell on Au seeds was optimized and secondary nucleation was avoided by tuning the discharge current, precursor concentration, and stabilizer (d-fructose) concentration. The shell thickness of Ag was also changed by changing the concentration of AgNO3 in the solution. UV-Vis spectroscopy, scanning electron microscopy, and energy-dispersive x-ray spectroscopy were used to analyze the synthesized nanoparticles. Furthermore, the particles were employed for catalysis and surface enhanced Raman spectroscopy (SERS)-based molecular trace detection. The catalytic efficiency of the NPs was investigated for the reduction of four molecules, i.e., 4-nitrophenol, methyl orange, Congo red, and rhodamine B. The SERS-based trace detection was studied for rhodamine 6G using the substrates of synthesized NPs. In both cases, core-shell nanoparticles showed far superior performance compared to the seed Au nanoparticles.