This work reports, synthesis of Ag nanoparticles in aqueous medium, under ambient reaction conditions using stearic acid as capping agent. Ag nanoparticles have been used for colorimetric detection of Hg 2+ in water. Effect of pH of the medium on size and stabilization of silver nanoparticles has been studied. Synthesized by chemical reduction of AgNO3 using NaBH4, Ag nanoparticles were characterised by UV-visible spectroscopy, transmission electron microscopy (TEM), FTIR spectroscopy and TGA techniques. Quenching of intensity along with blue shift of SPR band of Ag nanoparticles is observed due to deposition of Hg layer over Ag nanoparticles. Change in colour of Ag nanoparticles from dark yellow to colourless led to naked eye detection of Hg 2+ in water. The detection limit of Hg 2+ in water was found up to 1ppm monitored by colorimetric response of Ag nanoparticles by UV-visible spectrophotometer. A simple and cost-effective process allows quick determination of Hg 2+ in water.