The effect of novel silver nanowire encapsulated NaGdF:Yb,Er hybrid nanocomposite on the upconversion emission and bioimaging properties has been investigated. The upconvension nanomaterials were synthesised by polyol method in the presence of ethylene glycol, PVP and ethylenediamine. The NaGdF:Yb,Er-Ag hybrid was formed with upconverting NaGdF:Yb,Er nanoparticles of size ~ 80 nm and silver nanowires of thickness ~ 30 nm. The surface plasmon induced by the silver ion in the NaGdF:Yb,Er-Ag nanocomposite resulted an intense upconversion green emission at 520 nm and red emission at 660 nm by NIR diode laser excitation at 980 nm wavelength. The UV-Vis-NIR spectral absorption at 440 nm and 980 nm, the intense Raman vibrational modes and the strong upconversion emission results altogether confirm the localised surface plasmon resonance effect of silver ion in the hybrid nanocomposite. MRI study of both NaGdF:Yb,Er nanoparticle and NaGdF:Yb,Er-Ag nanocomposite revealed the T1 relaxivities of 22.13 and 10.39 mM s, which are larger than the commercial Gd-DOTA contrast agent of 3.08 mM s. CT imaging NaGdF:Yb,Er-Ag and NaGdF:Yb,Er respectively showed the values of 53.29 HU L/g and 39.51 HU L/g, which are higher than 25.78 HU L/g of the CT contrast agent Iobitridol. The NaGdF:Yb,Er and NaGdF:Yb,Er-Ag respectively demonstrated a negative zeta potential of 54 mV and 55 mV, that could be useful for biological application. The in vitro cytotoxicity of the NaGdF:Yb,Er tested in HeLa and MCF-7 cancer cell line by MTT assay demonstrated a cell viability of 90 and 80 %, respectively. But, the cell viability of NaGdF:Yb,Er-Ag slightly decreased to 80 and 78%. The confocal microscopy imaging showed that the UCNPs are effectively up-taken inside the nucleolus of the cancer cells, and it might be useful for NIR laser-assisted phototherapy for cancer treatment. Graphical abstract.