Although silver nanoparticles (AgNPs) are widely used as ion-releasing antimicrobial additives in medical devices, recent reports indicate the suppression of effectiveness in the presence of blood serum proteins. Bovine serum albumin (BSA) is known to bind silver and silver ions, so that the presence of proteins may change the antibacterial or cytotoxic properties of AgNPs even when they are embedded in a solid agar hydrogel matrix. We produced ligand-free AgNPs by laser ablation in water resulting in aqueous silver mass concentrations of 0.5 to 7.1\%. The AgNPs were immersed into agar in concentrations of 5–70 mg ml21 medium. We examined the influence of 1\% BSA within the hydrogel matrix on the nanoparticles’ antibacterial effect on four clinically relevant bacteria strains and the cytotoxicity of colloidal AgNP was tested on fibroblasts with or without 1\% BSA. The hydrogelimmobilized AgNPs showed a significant reduction of antibacterial activity in the presence of BSA. Cytotoxicity started at a colloidal AgNP concentration of 35 mg ml21, and addition of BSA significantly reduced the effect on cell morphology and viability. Overall, in the presence of BSA, both antibacterial and cytotoxic effects of AgNPs were markedly reduced. Notably, a therapeutic AgNP window, requiring a dose at which pathogenic bacteria growth is inhibited while fibroblast viability is not affected, could only be observed in the absence of BSA. Addition of BSA reduces the antibacterial activity of AgNP to a point without significant growth inhibition of S. aureus but still observable cytotoxic effects on HGFib. Hence, the presence of a major blood serum protein significantly decreases the antimicrobial effects of AgNPs on a range of pathogenic bacteria even when the NPs are immobilized within an agar hydrogel model.