In this study, the extracellular production of silver nanoparticles by the fungus Fusarium oxysporum was investigated. It was found that exposure of Fusarium oxysporum to silver ion leads to the formation of silver nanoparticles. The silver nanoparticles were in the range of 5-60 nm in dimension. The nanoparticles were examined using UV-Visible Spectroscopy, Scanning Electron Microscopy (SEM), Energy Dispersive X-ray Spectroscopy (EDS) and Transmission Electron Microscopy (TEM) analyses. The formation of nanoparticles by this method is extremely rapid, undertaken in ambient conditions and the synthesized hydrosol is stable for several months in the absence of light.