The current research was focused on the characterization and antimicrobial activity of silver nanoparticles (AgNPs) produced by Bacillus licheniformis NM120-17. The synthesis was initially observed by a colour change from pale yellow to brown which was further confirmed by UV-Vis spectroscopy. The AgNPs were characterized using TEM, EDAX and FTIR. The synthesized nanoparticles were found to be spherical and uniformly distributed with a size in the range of 9-27.5 nm. The antibacterial activities and acting mechanism of AgNPs were studied with respect to Staphylococcus aureus and Escherichia coli by measuring the growth curves, protein and reducing sugar leakage, respiratory chain dehydrogenase activity, as well as the formation of bactericidal reactive oxygen species (ROS). The experimental results indicated that 50 mg/ml AgNPs could completely inhibit the growth of bacterial cells and destroy the permeability of bacterial membranes and depress the activity of some membranous enzymes, which cause bacteria to die eventually. These nontoxic nanomaterials, which can be prepared in a simple and cost-effective manner, may be suitable for the formulation of new types of bactericidal materials.