<p>The increasing threat of multidrug-resistant pathogens calls for innovative solutions to combat infections. Recent developments in the design and synthesis of nanoparticles have enabled new enhanced strategies to address microbial infections caused by multidrug-resistant pathogens. <i>Candida</i> species are widely associated with recurrent infections and increasing multidrug resistance, highlighting the need for an effective and sustainable antifungal agent. The green synthesis of nanoparticles has garnered significant recognition, particularly for its sustainable nature. In this study, silver nanoparticles were synthesized using an aqueous extract of <i>Pleurotus djamor</i>, commonly known as pink oyster mushrooms, which is rich in bioactive compounds. The synthesized nanoparticles (POAgNPs) were characterized using UV–visible spectroscopy, FTIR, DLS/particle size analyser, Zeta potential analysis and FESEM with EDAX to confirm their characters and properties. Their antifungal activity was evaluated in <i>Candida</i> sp.—<i>Candida albicans ATCC</i>, <i>Candida metapsilosis</i>, <i>Candida tropicalis</i>, and clinical isolates of <i>C. albicans</i>. Assays including minimum inhibitory concentration, minimum fungicidal concentration, and biofilm inhibition demonstrated potent antifungal efficacy of POAgNPs. Their safety profile was obtained by conducting toxicity studies in zebrafish embryos that ascertained their use as safe, biocompatible, and non-toxic. The underlying mechanism of antifungal activity was further evaluated through various biochemical assays such as estimation of proteins and sugar leakage levels, quantification of malondialdehyde levels, determination of glutathione levels, and assessment of the activities of the antioxidant enzymes, namely catalase and superoxide dismutase. These findings indicate that <i>P. djamor</i>-mediated AgNPs represent an effective alternative to traditional antifungal agents, offering a promising solution to overcome multidrug resistance.</p>