Metal nanoparticles have a great impact and even change the composition of soil microbial communities. This poses the risk of their accumulation in the ecosystem, which may call on health hazard. Statistical techniques such as Plackett-Burman design, Response Surface Methodology were used for optimizing medium constituents for Bacillus cereus SVK1 and other critical variables responsible for the production of biomolecules and biosynthesis of hematite nanoparticles. The effect of hematite nanoparticles on the growth of soil bacteria were tested by agar-well diffusion method and dynamic growth curve techniques. Bacterial growth inhibition was not observed with hematite nanoparticle concentration of up to 25mg/mL. In addition, hematite nanoparticles enhanced the growth of the soil bacteria. The results show that hematite nanoparticles were non-toxic to soil bacteria indicating their scope for wide range of applications. The effective cytotoxic concentration (CTC50) of hematite nanoparticles against MCF-7, A549, Hep3B and Vero cell lines was found to be 207.58, 224.69, 193.26 and 2530μg/mL respectively. Hematite nanoparticles didn't cause lysis of red blood cells.