Abstract Poly(N-isopropylacrylamide-acrylamide-methacrylic acid) [p(NAM)] colloidal particles were synthesized and stabilized in aqueous medium. Ag nanoparticles were fabricated inside the p(NAM) system by in-situ reduction of Ag⁺ ions with NaBH₄ to obtain Ag-p(NAM) organic–inorganic hybrid with fascinating catalytic properties. Various characterization techniques including XRD, FTIR, DLS, TEM and UV–visible spectroscopy were used to confirm the fabrication of p(NAM) and Ag-p(NAM) in aqueous medium. Loading of silver nanoparticles into the p(NAM) does not affect responsive properties of the colloidal system. Ag-p(NAM) system was used as catalyst for reduction of toxic dyes including methyl orange (MO) and Congo red (CR) from aqueous medium. Ag-p(NAM) catalyzed reduction of dyes was carried out under different reaction conditions to explore the catalytic process of degradation. The Ag-p(NAM) catalytic system is recyclable and reusable with almost same catalytic activity up to four cycles.