The present invention relates to highly biocompatible or nontoxic PVP (poly(n-vinyl-2-pyrrolidone) coated silver prussian blue nanoparticles (SPB-NPS: Ag3[Fe(CN)6] where PVP acts as stabilizing or capping agent. The as-synthesized nanoparticles (SPB-NPs) have been thoroughly characterized by several analytical tools. The SPB-NPs are highly stable for more than two weeks towards different physiological buffers or solutions with different pH (pH=6, −7.4 & −8). These nanoparticles (SPB-NPs) exhibit biocompatibility towards various normal cells (HUVEC, CHO, & ECV304) but show significant inhibition of proliferation of different cancer cells in vitro and tumor growth in C57/BL6/J mice model (aggressive murine melanoma cancer model: B16F10). Additionally, the SPB-NPs show excellent antibacterial activity towards gram-negative (E. coli) and gram-positive (B. subtilis) bacteria. Consider all results together; these biocompatible SPB-NPs would be potentially useful for the development towards alternative anti-cancer agent as well as anti-bacterial agent in near future.