The influence of capping agents on silver nanoparticles (AgNPs) was investigated through a rapid and single-pot chemical reduction method. Four capping agents were tested: polyethylene glycol (PEG), ethylenediaminetetraacetic acid (EDTA), polyvinyl pyrrolidone (PVP) and polyvinyl alcohol (PVA). FTIR studies demonstrated that the formed AgNPs were properly encapsulated by their respective capping agents. Structural and morphological studies confirmed the following relative average particle sizes: PEG-AgNPs > EDTA-AgNPs > PVP-AgNPs > PVA-AgNPs. Optical absorption and photoluminescence studies showed, respectively, a greater absorption blue shift and greater emission intensity for the smaller capped particles. Zeta potential analysis of the PVA-AgNPs showed a value of -46.6 mV, indicating their high stability. The PVA-AgNPs were thus not only observed to be the smallest, most blue-shifted and most stable of the tested AgNPs, but also they displayed the highest antibacterial activity. The PVA-AgNPs were therefore applied as a localized surface plasmon resonance (LSPR)-based H2O2 sensor, which is important because the detection of reactive oxygen species such as H2O2 is of significance in the medical and environmental fields. The sensor based on the PVA-AgNPs successfully detected H2O2 at concentrations as low as 10-7 M. New biosensors using these NPs should thus find promising opportunities in a variety of fields. © The Royal Society of Chemistry 2016.