Bacteria are the causative agents of numerous diseases. Ever increasing number of bacterial infections has generated the need to find new antibiotic materials and new ways to combat bacterial infections. Our study investigated <i>Azadirachta indica</i> (AI) as an alternate source of antibiotic compounds. Phytochemical and GC-MS analysis revealed presence of flavonoids, phenolic compounds, terpenoids and terpenes. Aqueous extracts of leaves were used to synthesize silver nanoparticles (AI-AgNPs), as established by colorimetric confirmation with maximum absorbance peak at 400 nm. Optimized reaction parameters produced high yield of stable AI-AgNPs, which were characterized by UV-Vis spectroscopy, energy-dispersive X-ray spectroscopy, scanning electron microscopy, and transmission electron microscopy. Results confirmed particle diameter of 33 nm and spherical shape of AI-AgNPs. Fourier transform infrared spectroscopy inferred the presence of functional groups in bioactive constituents involved in conversion of silver ions into elemental silver by acting as capping and reducing agents during formation of AI-AgNPs. X-ray diffraction revealed their crystalline nature. Toxicity studies on <i>Drosophila</i> validated normal egg laying capacity and eclosion of F1 generation on AI-AgNPs (100 μg/mL). DPPH (65.17%) and ABTS (66.20%) assays affirmed strong radical scavenging effect of AI-AgNPs (500 μg/mL). The antibacterial activity of AI-AgNPs (1,000 μg/mL) was confirmed by disc diffusion assay with zone of inhibition against <i>Bacillus cereus</i> (17.7 mm), <i>Escherichia coli</i> (18.7 mm), <i>Pseudomonas aeruginosa</i> (10.3 mm), and <i>Staphylococcus aureus</i> (17.7 mm). Minimum inhibitory concentration and minimum bactericidal concentration values for AI-AgNPs ranged between 390 and 780 μg/mL. Higher bacterial suppression by AI-AgNPs in comparison with AI-extract was further divulged by prominent damage to the bacterial cell walls, disintegration of cell membranes and outflow of intercellular content as evident in SEM...