Phycoerythrin is the main phycobiliprotein that responsible for harvesting light for photosynthesis in cyanobacteria. In this research, phycoerythrin extracted from the cyanobacterium Nostoc carneum has been used to reduce silver nitrate for silver nanoparticles (AgNPs) biosynthesis. UV-visible spectrophotometry for measuring surface plasmon resonance showed a single absorption peak at 430 nm, which confirmed the presence of AgNPs. The face-centered central composite design was chosen to evaluate the interaction effects between four process variables and also to determine their optimal levels which influence the AgNPs biosynthesis using phycoerythrin. The maximum silver nanoparticles biosynthesis (1733.260 ± 21 µg/mL) was achieved in the central runs under the conditions of initial pH 10, incubation period of the 24 h, phycoerythrin concentration of the 0.8 mg/mL and 20 mM of AgNO3. The biosynthesized AgNPs were characterized using TEM which revealed the formation of spherical shape nanoparticles with size ranged between 7.1‒26.68 nm. EDX analysis confirmed silver as the major constituent element. FTIR spectrum indicates the presence of proteinaceous capping agent that prevents silver nanoparticles agglomeration. The IC50 of cell inhibition by AgNPs was observed at 13.07 ± 1.1 µg/mL. Treatment of mice bearing Ehrlich ascites carcinoma with 5 mg AgNPs/kg of mice body weight significantly decreased tumor volume, tumor cells count, white blood cells count and body weight. It was concluded that the phycoerythrin protein has the ability to synthesize AgNPs, which have antibacterial, antihemolytic, in vitro and in vivo cytotoxic activities.