Ultrasmall silver nanoparticles (AgNPs; size < 3 nm) have attracted a great deal of interest as an alternative to commercially available antibiotics due to their ability to eliminate a wide range of microbial pathogens. However, most of these ultrasmall AgNPs are highly reactive and unstable, as well as susceptible to fast oxidation. Therefore, both the stability and toxicity remain major shortcomings for their clinical application and uptake. To circumvent these problems, we present a novel strategy to impregnate ultrasmall AgNPs into a biocompatible thermosensitive hydrogel that enables controlled release of silver alongside long-term storage stability and highly potent antibacterial activity. The advantage of this strategy lies in the combination of a homogenous dispersion of AgNPs in a hydrogel network, which serves as a sustained-release reservoir, and the unique feature of ultrasmall AgNP size, which provides an improved biofilm eradication capacity. The superior biofilm dispersion properties of the AgNP hydrogel is demonstrated in both single-species and multispecies biofilms, eradicating ∼80% of established biofilms compared to untreated controls. Notably, the effective antibacterial concentration of the formulation shows minimal toxicity to human fibroblasts and keratinocytes. These findings present a promising novel strategy for the development of AgNP hydrogels as an efficient antibacterial platform to combat resistant bacterial biofilms associated with wound infections.