Algal-mediated synthesis of nanoparticles (NPs) opens the horizon for green and sustainable synthesis of NPs that can be used in many fields, such as medicine and industry. We extracellularly synthesized silver NPs (Ag-NPs) using the novel microalgae Planophila laetevirens under optimized conditions. The isolate was collected from freshwater/soil, purified, morphologically identified, and genetically identified using light, inverted light, scanning electron microscopy, and 18S rRNA sequencing. The phytochemicals in the algal extract were detected by GC-MS. Aqueous biomass extracts and cell-free media were used to reduce silver nitrate to Ag-NPs. To get small, uniformly shaped, and stable Ag-NPs, various abiotic parameters, including precursor concentration, the ratio between the reductant and precursor, temperature, time of temperature exposure, pH, illumination, and incubation time, were controlled during the synthesis of Ag-NPs. B-P@Ag-NPs and S-P@Ag-NPs (Ag-NPs synthesized using biomass and cell-free medium, respectively) were characterized using UV-vis spectroscopy, transmission electron microscopy, scanning electron microscopy, energy-dispersive X-ray analysis (EDX) and mapping, Fourier transform infrared (FTIR) spectroscopy, and a zeta sizer. S-P@Ag-NPs had a smaller size (10.8 ± 0.3 nm) than B-P@Ag-NPs (19.0 ± 0.6 nm), while their shapes were uniform quasispherical (S-P@Ag-NPs) and spherical to oval (B-P@Ag-NPs). EDX and mapping analyses demonstrated that Ag was the dominant element in the B-P@Ag-NP and S-P@Ag-NP samples, while FTIR revealed the presence of O-H, C-H, N-H, and C-O groups, indicating that polysaccharides and proteins acted as reductants, while polysaccharides/fatty acids acted as stabilizers during the synthesis of NPs. The hydrodynamic diameters of B-P@Ag-NPs and S-P@Ag-NPs were 37.7 and 28.3 nm, respectively, with negative charges on their surfaces, suggesting their colloidal stability. Anticancer activities against colon cancer (Sw620 and HT-29 cells), breast cancer (MDA-MB231 and MCF-7 cells), and normal human fibroblasts (HFs) were screened using the MTT assay. B-P@Ag-NPs and S-P@Ag-NPs had a greater antiproliferative effect against colon cancer than against breast cancer, with biocompatibility against HFs. The biocidal effects of the B-P@Ag-NPs and S-P@Ag-NPs were evaluated against Escherichia coli, Bacillus cereus, and Bacillus subtilis using agar well diffusion and resazurin dye assays. B-P@Ag-NPs and S-P@Ag-NPs caused higher growth inhibition of Gram-negative bacteria than of Gram-positive bacteria. B-P@Ag-NPs and S-P@Ag-NPs synthesized by P. laetevirens are promising antitumor and biocidal agents.