Highly stable carbohydrate conjugated silver, gold and bimetallic silver-gold alloy biocompatible and nearly monodisperse nanoparticles (NPs) have been synthesized through bio-reduction of aqueous solution of corresponding metal salt precursors mediated by aqueous extracts of a high altitude lichen, Lobaria retigera. The biomolecule accountable for the reduction, stabilization and capping of the metal nanoparticles is identified to be carbohydrates. The as-synthesized carbohydrate conjugated nanoparticles have excellent dispersibilty in water, phosphate, phosphate-buffered saline, and serum media. The resulting nanoparticles were completely stable for several months in water. The nanoparticles were characterized using UV–visible spectroscopy, TEM, EDX, FT-IR, powder XRD, DLS and CV study. Though mostly spherical in shapes, occasionally truncated triangular and rod shapes were also noted. The average particle sizes of Ag, Au and Ag-Au alloy nanoparticles as determined from TEM analysis are 14.5 nm, 11.7 nm and 16.3 nm, respectively. Cyclic voltammetry pointed to a relatively high electrode potential barrier for the synthesized nanomaterials. The prepared Ag, Au and Ag-Au alloy nanoparticles served as efficient catalysts for the degradation of hazardous pollutant dye, methyl orange (MO) with rate constat of 0.1496 min−1, 0.1049 min−1, and 0.1882 min−1. The bimetallic Ag-Au nanoparticles exhibited the most accelerated reduction with 90.6% degradation efficiency. The reduction kinetics for the reactions followed a pseudo-first order, kAu < kAg< kAu-Ag. The Ag and Ag-Au alloy NPs showed pronounced antimicrobial activity towards selected bacterial strains while AuNPs lacked any such activity.