A new and simple ecofriendly method for the synthesis of silver nanoparticles (Ag NPs) using a natural biopolymer, sodium alginate as both reducing and stabilizing agent is reported. The synthesized NPs were characterized using UV-Vis spectroscopy, transmission electron microscopy (TEM) and selected area electron diffraction pattern (SAED). The alginate capped NPs (Alg–Ag NPs) were found to be antibacterial. The Alg–Ag NPs were blended with varying amounts of chitosan to form polyelectrolyte complex that was cast into stable films. The films were characterized by field emission scanning electron microscopy (FESEM), optical microscopy, Fourier transform infrared spectroscopy (FTIR) and X-ray diffraction (XRD). The water uptake and mechanical properties of the films were also studied. The blended film demonstrated excellent antibacterial activity against both Gram negative and Gram positive bacteria with more activity against Gram positive bacteria. Thus, the developed films have a potential to be used for various antibacterial applications in biotechnology and biomedical fields.