In this study, ZnO and Ag-ZnO nanoparticles were synthesized using the co-precipitation method, and their cytotoxic activity and antimicrobial activity were studied against human pathogenic bacteria and fungi. The optical, morphological, and structural properties of synthesized nanoparticles were investigated using different techniques like UV-visible spectroscopy, Fourier transform infrared spectroscopy, X-ray diffraction, scanning electron microscopy, energy-dispersive spectroscopy, transmission electron microscopy, dynamic light scattering, and X-ray photoelectron spectroscopy. The average nanoparticle size of ZnO and Ag-ZnO is 89 nm and 84.5 nm respectively. Biosynthesized nanoparticles showed a spherical shape encapsulated with a rod form. Further, the elemental percentage, the polycrystalline nature of pure and mixture of nanoparticles, and the average particle size are studied. Energy-dispersive studies confirmed the presence of silver along with Zn. The reduction in viability of the bacteria in ZnO and Ag-ZnO nanoparticles was reported at the minimum concentration 5 mM. This inhibits the growth of each Gram-positive and Gram-negative bacteria and its comparative study between the different synthesis methods as well as human pathogenic fungi at the dose 2 mM, 5 mM, and 8 mM screened by the minimum inhibitory concentration assay. The Ag-ZnO nanoparticles showed a cytotoxic effect on human RBC at the concentration of 25 mu g/ml, while ZnO nanoparticles showed less toxicity at the same dose. In addition to Ag to ZnO nanoparticles, Capsicum Frutescence fruit extract plays a crucial role in enhanced antibacterial and antifungal effects with less toxicity.