Silver nanoparticles (AgNPs) have been synthesized and characterized in the current study, and evaluated in terms of their use for the decolorization of methylene blue dye. AgNPs were successfully prepared using a green chemistry process from isolated endophytic fungus. Nine fungal endophytes were isolated from the leaves of Ocimum balilicumL. The four major isolates of Aspergillus sp., Penicillium sp., Cladosporium sp., and Alternaria sp. were tested for the extracellular synthesis of AgNPs. The formation of AgNPs was initially observed as a change in color and was subsequently confirmed by Ultraviolet-visible spectroscopy, which showed a characteristic absorption peak for silver at 420 nm. Aspergillus sp. was determined to be the most potent producer of AgNPs and was subjected to further characterization. Transmission electron microscopy studies showed that the AgNPs were 4–15 nm in size. X-ray diffraction analysis revealed the crystalline pattern of the AgNPs. Based on the sequences of the ribosomal DNA, internal transcribed spacer regions, the major endophytic species was identified as Aspergillus niger and the sequence data were submitted to the GenBank [GenBank: LC009511.1]. Further analysis showed that AgNPs efficiently decolorized methylene blue dye up to 96% within 72 h of incubation. AgNPs could therefore be used as highly economical agents for the rapid removal of dye-based pollutants from the environment and could also be used for the control of other reducible contaminants.