The present work deals with the green synthesis and characterization of silver nanoparticles (AgNPs) using Allium cepa (yellowish peel) and the evaluation of its antimicrobial, antioxidant, and anticholinesterase activities. For the synthesis of AgNPs, peel aqueous extract (200 mL) was treated with a 40 mM AgNO3 solution (200 mL) at room temperature, and a color change was observed. In UV-Visible spectroscopy, an absorption peak formation at ~439 nm was the sign that AgNPs were present in the reaction solution. UV-vis, FE-SEM, TEM, EDX, AFM, XRD, TG/DT analyses, and Zetasizer techniques were used to characterize the biosynthesized nanoparticles. The crystal average size and zeta potential of AC-AgNPs with predominantly spherical shapes were measured as 19.47 ± 1.12 nm and −13.1 mV, respectively. Pathogenic microorganisms Bacillus subtilis, Staphylococcus aureus, Escherichia coli, Pseudomonas aeruginosa, and Candida albicans were used for the Minimum Inhibition Concentration (MIC) test. When compared to tested standard antibiotics, AC-AgNPs demonstrated good growth inhibitory activities on P. aeuruginosa, B. subtilis, and S. aureus strains. In vitro, the antioxidant properties of AC-AgNPs were measured using different spectrophotometric techniques. In the β-Carotene linoleic acid lipid peroxidation assay, AC-AgNPs showed the strongest antioxidant activity with an IC50 value of 116.9 µg/mL, followed by metal-chelating capacity and ABTS cation radical scavenging activity with IC50 values of 120.4 µg/mL and 128.5 µg/mL, respectively. The inhibitory effects of produced AgNPs on the acetylcholinesterase (AChE) and butyrylcholinesterase (BChE) enzymes were determined using spectrophotometric techniques. This study provides an eco-friendly, inexpensive, and easy method for the synthesis of AgNPs that can be used for biomedical activities and also has other possible industrial applications.