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Recent advances in nanoscience and nanotechnology have revolutionized the medical field, particularly in the treatment and prevention of disease. Silver nanoparticles (AgNPs) are considered one of the best supreme and most important nanomaterials with a variety of compulsive nanomaterial having diverse array of multifunctional bioapplications. The current study focuses on the green biosynthesis of AgNPs using polysaccharides extracted from Olea europaea leaves. The synthesized AgNPs were thoroughly analyzed and characterized using various spectroscopic and microscopic techniques including, UV-Vis spectroscopy, Fourier transform infrared spectroscopy (FTIR), X-ray diffraction, Energy dispersive X-ray (EDX), and Scanning electron microscopy (SEM). The absorption peak at 440 nm showed a high plasmon resonance band, confirming the formation of green AgNPs by the reduction of Ag+ ions to Ag0. FTIR analysis showed the appearance and extension of different functional groups. The results of EDX and SEM confirmed the synthesis of AgNPs with spherical shape, crystalline structure, and an average size of 64.42 nm. The biosynthesized AgNPs possessed improved antimicrobial activities, indicating the importance of biosynthesized NPs in the pharmaceutical industry. In addition, the biosynthesized AgNPs were biocompatible and exhibited anti-inflammatory activity (86.29%), almost similar to that of a standard drug (87.78%) at a concentration of 500 µL/mL. The polysaccharides obtained from O. europaea could be considered as effective reducing agent, leading to an environmentally friendly synthesis of stable and biologically important AgNPs with a wide range of applications.