The present work reports the synthesis, characterization, and antimicrobial activities of adipic acid-capped silver nanoparticles (AgNPs@AA) and their utilization for selective detection of Hg2+ ions in an aqueous solution. The AgNPs were synthesized by the reduction of Ag+ ions with NaBH4 followed by capping with adipic acid. Characterization of as-synthesized AgNPs@AA was carried out by different techniques, including UV–Visible spectroscopy, Fourier Transform Infrared Spectroscopy (FTIR), Scanning Electron Microscopy (SEM), X-ray diffraction (XRD), Dynamic Light Scattering (DLS), and zeta potential (ZP). In the UV–Vis absorption spectrum, the characteristic absorption band for AgNPs was observed at 404 nm. The hydrodynamic size of as-synthesized AgNPs was found to be 30 ± 5.0 nm. ZP values (−35.5 ± 2.4 mV) showed that NPs possessed a negative charge due to carboxylate ions and were electrostatically stabilized. The AgNPs show potential antimicrobial activity against clinically isolated pathogens. These AgNPs were found to be selectively interacting with Hg2+ in an aqueous solution at various concentrations. A calibration curve was constructed by plotting concentration as abscissa and absorbance ratio (AControl − AHg/AControl) as ordinate. The linear range and limit of detection (LOD) of Hg2+ were 0.6–1.6 μM and 0.12 μM, respectively. A rapid response time of 4 min was found for the detection of Hg2+ by the nano-probe. The effect of pH and temperature on the detection of Hg2+ was also investigated. The nano-probe was successfully applied for the detection of Hg2+ from tap and river water