Silver nanoparticles (AgNPs) are expected to enter aquatic systems, but there are limited data on how they might affect microbial communities in pathogen impaired streams. We examined microbial community responses to citrate-AgNP (10.9 ± 0.7 nm) and polyvinylpyrrolidone (PVP)–AgNP (11.0 ± 0.7 nm) based on microbial concentration and enzyme activity in sediment from a pathogen impaired stream. Addition of each nanoparticle to sediment caused at least a 69% decrease in microbial concentration (1,264 ± 93.6 to 127 ± 29.5 CFU/g) and a 62% decrease in β-glucosidase activity (11.7 ± 2.1 to 1.3 ± 0.3 μg/g/h). Each AgNP reduced alkaline phosphatase activity but their effects were not statistically significant. Sediment exposed to 0.108 mg Ag/kg of AgNO3 resulted in a 92% decrease in microbial concentration and a reduced enzyme activity which was not statistically significant. Measured total silver in sediments treated with AgNPs which exhibited significant inhibition effects on the microbial community ranged from 0.19 ± 0.02 to 0.39 ± 0.13 mg Ag/kg. These concentrations tested in this study are much lower than the expected concentrations (2–14 mg Ag/kg) in freshwater sediments. The results of this study demonstrate that AgNPs can alter microbial community activity and population size, which may lead to false negative fecal indicator bacteria detection and enumeration using methods that rely on β-glucosidase activity. We conclude that the presence of AgNPs in impaired streams and recreational waters can influence pathogen detection methods, potentially affecting public health risk estimates.