The increasing emergence of antibiotic resistance coupled with the limited effectiveness of current treatments highlights the need for the development of new treatment modalities. Silver nanoparticles (AgNPs) are a promising alternative with broad-spectrum antibacterial activity. However, the clinical translation of AgNPs have been hampered primarily due to the delivery of unsafe levels of silver ions (Ag) resulting in cellular toxicity and their susceptibility to aggregation resulting in loss of efficacy. Here, we describe a safe and effective, thermo-responsive AgNP hydrogel that provides antibacterial effects in conjunction with wound promoting properties. Using a murine model of wound infection, we demonstrate that the applied AgNP hydrogel to the wound (12 µg silver) not only provides superior bactericidal activity but also reduces inflammation leading to accelerated wound closure when compared to industry-standard silver sulfadiazine (302 µg silver). The AgNP hydrogel-treatment significantly accelerated wound closure at day 4 post-infection (56 closure) compared to both blank hydrogel or Ag SD (74% and 91% closure respectively) with a concurrent increase in PCNA-positive proliferating cells corresponding with a significant 32% improvement in wound re-epithelization compared to the blank hydrogel. Treatment of infected wounds with AgNP hydrogel also decreased neutrophil infiltration, increased anti-inflammatory Ym-1 positive M2 macrophages, and reduced the number of caspase-1 positive apoptotic cells. Therefore, this novel multifunctional AgNP thermo-responsive hydrogel is potentially a safe and effective treatment at much lower concentration for the treatment of wound infections. STATEMENT OF SIGNIFICANCE: In this study, we describe the development of a multifunctional thermo-responsive hydrogel of ultrasmall silver nanoparticles (AgNPs) for controlled and optimized delivery of silver to infected wounds. The in vivo biological effects of the developed hydrogel showed significant S. aureus elimination from infected mouse wounds compared to a commercial antibacterial formulation. The developed AgNP hydrogel optimally regulates inflammatory responses to promote wound healing as indicated by increased cell proliferation and wound re-epithelization. Additionally, AgNP hydrogel shows significant potential in regulating neutrophil infiltration while increasing levels of anti-inflammatory M2 macrophages and reduces the number of apoptotic cells. Therefore, the multifunctional properties of the developed AgNP thermo-responsive hydrogel offers great clinical potential to control bacterial infections and promote wound healing.