Microalgae-mediated nanoparticle (NP) biosynthesis is a promising green synthesis method that overcomes the challenges of conventional synthesis methods. The novel strain CCAP 6006/5 was isolated, purified, and characterized morphologically and genetically. GC-MS analysis of the algal biomass (D) phytochemicals showed the abundance for elaidic acid (18.36%) and monoolein (17.37%). UV-VIS spectroscopy helped analyze the effects of the AgNO concentration, algal/silver nitrate ratio, temperature, reaction time, illumination, and pH on AgNP synthesis. D extract or cell-free medium (D) of successfully biosynthesized small silver NPs (AgNPs), namely, D@AgNPs and D@AgNPs, under optimum reaction conditions. TEM and SEM showed a quasi-spherical shape, with average diameters of 15.0 ± 1.0 nm and 12.0 ± 0.8 nm, respectively. EDx and mapping analyses revealed that silver was the main element, the NP hydrodynamic diameters were 77.9 and 62.7 nm, and the potential charges were -24.4 and -25.8 mV, respectively. FTIR spectroscopy revealed that the D@AgNPs, and D@AgNPs were coated with algal functional groups, probably derived from algal proteins, fatty acids, or polysaccharides, representing reductant and stabilizer molecules from the synthesis process. They showed significant anticancer activity against breast cancer cells (MCF-7), low toxicity against normal kidney cells (Vero), and potent inhibitory activity against , , and . is a novel biomachine for synthesizing small, stable and potent therapeutic AgNPs.