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Abstract In the context of anti-cellular catalytic permutations, the development of thermally-induced nanotechnology is of great importance. In this study, iron oxides (Fe2O3) decorated silver (Ag) core–shell nanocomposite was prepared using a green thermal decomposition process without using any additional chemicals. The nanocomposite was characterized for its composition, phase interactions, morphology, and stability using spectroscopic, thermogravimetric, and microscopic techniques. The resultant nanocomposite were also investigated against different types of bacteria and cancer cell lines. Both Gram-positive bacteria (Staphylococcus aureus) and Gram-negative bacteria (Klebsiella spp., E. coli, and Pseudomonas) growth was inhibited by the Ag/Fe2O3 nanocomposite. The highest 19 mm zone of inhibition (ZOI) was found for Staphylococcus aureus by the combined effect of Ag and Fe2O3. The antibiofilm efficacy of the prepared nanocomposites showed biofilm destruction of 82.56% Staphylococcus aureus and 51.06% Klebsiella spp. Furthermore, the nanocomposite resulted in 80–90% death of Hela and BHK-21 cells but displayed lower cell toxicity in the case of the Vero cell line. This pathway of nanocomposites preparation with particle surface engineering would open new doors in the fields of nanobiotechnology and nanobiomedical applications.