The antibacterial and anticancer potential of silver nanoparticles (Ag-NPs) is promising for cancer treatment and fighting multidrug-resistant bacteria. This study introduces the first eco-friendly synthesis of Ag-NPs using a cell-free extract (CFE) of Chaetomium olivaceum strain B422 isolated from grapevine. In this study, ten fungal strains collected from grapevine trunks and twigs were purified and cultured on potato dextrose agar (PDA) at 25 °C (pH 5) under dark conditions for 7 to 14 days. Ag-NPs were synthesized using CFEs of the fungal strains and silver nitrate as precursor. The biosynthesis process was optimized by varying factors such as silver nitrate concentration, pH, temperature, agitation speed and incubation time using a one-factor-at-a-time approach. The synthesized Ag-NPs were characterized for various properties such as size, structure and stability using UV-Vis spectroscopy, field emission scanning electron microscopy (FESEM), dynamic light scattering (DLS), Raman spectroscopy and X-ray diffraction (XRD). Of the ten fungal strains studied, only strain B422, identified as C. olivaceum by phylogenetic analysis of DNA sequence data, successfully synthesized Ag-NPs by reduction of silver nitrate. This was confirmed by a color change to dark brown and a distinct UV-Vis absorption peak at 425 nm. Optimal conditions for biosynthesis were found to be 5 mM silver nitrate, pH 7, 35 °C, no shaking and an incubation period of 96-120 h. FE-SEM analysis revealed nanoparticles ranging in size from 2 to 92 nm, with an average size of 32 to 42 nm, while DLS analysis revealed a hydrodynamic size of 46.3 nm. Zeta potential measurements showed high stability (-23.5 mV). Raman spectroscopy identified functional groups associated with the Ag-NPs and XRD confirmed their crystalline structure. The sustainable synthesis of Ag-NPs using fungal CFE allows precise control of nanoparticle size and morphology, making it highly relevant for biomedical applications and a significant advancement in green nanotechnology for healthcare.