There is an enormous interest in developing green synthesis procedures for production of nanoparticles by using biomimetic approaches. In our research focus has been given to the development of an efficient and eco-friendly viable process for the synthesis of nanoscale silver particles using Proteus mirabilis PTCC 1710, a bacterial strain that was isolated during a screening program from photographic waste. A significant result of this study is our observation that silver nanoparticles could be induced to synthesis intra and extracellulary. The silver nanoparticles were characterized by means of UV-Vis spectroscopy, transmission electron microscopy (TEM), energy-dispersive spectroscopy (EDS) and atomic absorption spectrometer (AAS). The nanoparticles exhibited maximum absorbance at 400-410 nm in UV-Vis spectroscopy. TEM images showed formation of stable silver nanoparticles of spherical shape with most of the particles in the size range of 10-20 nm. It was found that incubation of bacterial cells in Muller-Hinton broth medium resulted in higher extracellular synthesis of silver nanoparticles, whereas intracellular synthesis of silver nanoparticles effectively increased in tryptic soy broth. The method of extraction of intracellular silver nanoparticles was inexpensive, simple and effective in large scale with no need to complex instruments. The bacteria work as a bionanofactory which continued to grow after synthesis of silver nanoparticles. The silver reduction by this strain is occurred through energy-dependent processes that lead to the high output of this reaction. Hence this new approach of using a non-pathogenic bacterial strain for the successful synthesis of nanosized silvers could be easily scaled up which establishes its commercial viability.