The present work describes the use of Caffeic acid, a naturally occurring plant polyphenol for the biofabrication of silver nanoparticles (AgNPs) by an eco-friendly approach. The caffeic acid acts as both reducing and stabilizing agent during the reduction of graphene oxide (GO). TEM, XRD, UV-vis, FT-IR and EDS characterization results confirmed the AgNPs formation. FTIR results have confirmed the capping of AgNPs with the oxidized caffeic acid molecules, which causes their stabilization by preventing aggregation of nuclei. TEM images showed the formation of small, spherical NPs. The average size of the AgNPs was about 10 nm, which was supported by TEM and DLS results. Additionally, SAED pattern revealed the polydispersity of the synthesized AgNPs with crystalline nature. Further, the in-vitro cytotoxicity against the osteoarthritis chondrocytes showed the biocompatibility of the synthesized AgNPs. Further the biocompatibility of AgNPs opens its applications towards biomedical fields such as drug delivery and bioimaging. These results also open a biosynthetic route for the development of new AgNPs based technologies.