Silver nanoparticle (SNP) is a threat to soil, water and human health. Protection of environment from silver nanoparticles is a major concern. A sewage isolate, Bacillus pumilus treated with SNPs showed similar growth kinetics to that without nanoparticles. A reduction in the amount of exopolysaccharides was observed after SNPs - B. pumilus culture supernatant interaction. The Fourier transform infrared spectroscopy (FT-IR) peaks for the exopolysaccharides extracted from the bacterial culture supernatant and the interacted SNPs were almost similar. The exopolysaccharide capping of the SNPs was confirmed by UV-Visible, FT-IR and X-ray diffraction analysis. The study of bacterial exopolysaccharides capped SNPs with E. coli, S. aureus and M. luteus showed less toxicity compared to uncoated SNPs. Our studies suggested that the capping of nanoparticles by bacterially produced exopolysaccharides serve as the probable mechanism of tolerance. © 2011 The Research Centre for Eco-Environmental Sciences, Chinese Academy of Sciences.