The catalytic reduction of methylene blue was studied using biosynthesised gold-silver (Au-Ag) alloy nanoparticles (NPs). The fungal biomass of Trichoderma harzianum was used as a reducing and stabilising agent in the synthesis of Au-Ag alloy NPs. The synthesised NPs were well characterised by UV-vis spectroscopy, dynamic light scattering, X-ray diffraction, transmission electron microscopy, energy dispersive X-ray spectroscopy and Fourier transform infrared spectroscopy. The plausible synthesis mechanism involved in the formation of Au-Ag alloy NPs was also discussed with diagrammatic representation. A series of experiments was performed to investigate the catalytic activity of the as-prepared Au-Ag alloy NPs and found that the alloy NPs show excellent catalytic activity.