Silver nanoparticles (Ag NPs) have attracted attention in the field of biomaterials due to their excellent antibacterial property. However, the reducing and stabilizing agents used for the chemical reduction of Ag NPs are usually toxic and may cause water pollution. In this work, Ag NPs (31.2 nm in diameter) were prepared using the extract of straw, an agricultural waste, as the reducing and stabilizing agent. Experimental analysis revealed that the straw extract contained lignin, the structure of which possesses phenolic hydroxyl and methoxy groups that facilitate the reduction of silver salts into Ag NPs. The surfaces of Ag NPs were negatively charged due to the encapsulation of a thin layer of lignin molecules that prevented their aggregation. After the prepared Ag NPs were added to the precursor solution of acrylamide, free radical polymerization was triggered without the need for extra heating or light irradiation, resulting in the rapid formation of an Ag NP–polyacrylamide composite hydrogel. The inhibition zone test proved that the composite hydrogel possessed excellent antibacterial ability due to the presence of Ag NPs. The prepared hydrogel may have potential applications in the fabrication of biomedical materials, such as antibacterial dressings.