This research develops a novel route for the coloration of silk fabric with green synthesized silver nanoparticles (AgNPs) using chitosan as a natural eco-friendly reducing agent. The formation of AgNPs was characterized by the appearance of LSPR absorption peak at 414–448 nm. Based on a TEM image of spherical particles dominated at a particle size between 5 and 10 nm. The zeta potential shows that the AgNPs synthesized from the chitosan are highly stable. The deposition of AgNPs on the silk fabric surface was analyzed with scanning electron microscopy (SEM). The coloration and fastness properties of fabric were found to be significantly improved, a result related to the surface plasmon resonance of AgNPs. The antibacterial properties of the fabric were also found to be excellent, as a more than 87% bacterial reduction was noticed even after 20 washing cycles. Overall, this silk coloration using green nanoparticles can contribute to the low-cost production of multifunctional textiles.