The biological synthesis of nanoparticles has been emerging as an environmentally benign and eco-friendly method owing to its cost-effectiveness and high efficiency. Recently, the biological synthesis of semiconductor and metal-doped semiconductor nanoparticles with enhanced photocatalytic degradation efficiency and anticancer and antibacterial properties have gained tremendous attention. In pursuit of this purpose, for the first time, we biosynthesized zinc oxide (ZnO) and silver/ZnO nanocomposites (NCs) as semiconductor and metal-doped semiconductor nanoparticles, respectively, using the cell-free filtrate (CFF) of Lysinibacillus sphaericus bacterium. The biosynthesized ZnO and Ag/ZnO were characterized by various techniques such as ultraviolet-visible spectroscopy, X-ray diffraction, Fourier-transform Infrared spectroscopy, Field-emission scanning electron microscopy, transmission electron microscopy, and photoluminescence spectroscopy. The photocatalytic degradation potential of these semiconductor/metal-semiconductor nanoparticles was evaluated against the degradation of azo dye methylene blue (MB) under simulated solar irradiation. Ag/ZnO showed 90.7 ± 0.91% photocatalytic degradation of MB, compared to 50.7 ± 0.53% by ZnO in 120 min. The cytotoxicity of ZnO and Ag/ZnO on human cervical HeLa cancer cells was determined using an MTT assay. Both nanomaterials exhibited cytotoxicity in a concentration-dependent and time-dependent manner on HeLa cells. The antibacterial activity was also determined against Gram-negative (Escherichia coli) and Gram-positive (Staphylococcus aureus). Compared to ZnO, Ag/ZnO NPs showed higher antibacterial activity. Hence, the biosynthesis of semiconductor nanoparticles could be a promising strategy for developing hybrid metal/semiconductor nanomaterials for different biomedical and environmental applications.