Silver nanoparticles have been loaded in poly(N-isopropylacrylamide-co-2-hydroxyethylmethacrylate) [P(NIPA-HEMA)] microgels through in situ reduction method. Presence of silver nanoparticles in micro-hosts was confirmed by different characterization techniques like UV–Visible spectroscopy (UV–Vis), Fourier transform infrared spectroscopy (FTIR), Dynamic light scattering (DLS) and Transmission electron microscopy (TEM). Morphologies of micro-hosts and composite microparticles were clearly shown by microscopic analysis to be core–shell types. Nanoparticles were mainly found in the shell region of micro-hosts due to which high catalytic activity was observed towards reduction of p-nitrophenol (p-NP). Value of observed rate constant of the reaction was evaluated by changing different variables such as concentration of p-NP, NaBH4, catalyst and temperature of the reaction medium. Dependence of catalytic activity upon temperature was observed as tunable and switchable under variation of temperature of the medium. Value of observed rate constant (kob) was found to increase from 0.127 per min to 0.232 per min as the temperature (T) increased from 21 °C to 30 °C. Then further rise in temperature dropped the rate constant value to 0.153 per min because of volume phase transition in polymeric network. Further increase in kob with T rise was according to Arrhenius behavior. The positive activation enthalpy (ΔH* = +49641.23 Jmol−1) and positive activation entropy (ΔS* = +70.43 Jmol−1 K−1) indicate that formation of activated complex is an entropy driven endothermic process. P(NIPA-HEMA)-Ag has potential to be used as an efficient catalytic system for degradation of toxic chemicals.