The research evaluated the effect of using silver instead of nickel during nanocomposite (NC) formation (Ag-CeO2 and NiO-CeO2) on their resulting properties. Matricaria chamomilla extract with rich contents of phenolics and other phytochemical components functioned as the main category of components in the green synthesis of NCs. Ag-CeO2 NC demonstrated double the concentration of phenolics, flavonoids, and tannins compared to NiO-CeO2 NC. During biosynthesis, the functional groups of nanoparticles (NPs) indicated forming chemical bonds with particular phytochemical components present in the solution. The IC50 value for Ag-CeO2 NC was 0.086 mg/mL, indicating higher antioxidant activity compared to NiO-CeO2 NC, which exhibited a higher IC50 value of 0.142 mg/mL, reflecting lower scavenging efficiency. Ag-CeO2 NPs exhibited better bacterial inhibition of both Gram-negative and Gram-positive bacterial strains through their superior antioxidant properties. The MIC of Ag-CeO2 NC against K. pneumoniae and S. aureus strains was 110 μg/mL, which is four times lower than the minimum inhibitory concentration (MICs) observed against S. typhimurium and B. cereus (440 μg/mL). The significant antifungal activity of Ag/CeO2 NC alongside NiO/CeO2 NCs against Rhizoctonia solani fungal species was detected using Transmittance electron microscope (TEM) analysis. The work was intended to study the protein-PDB: 2I80 residues binding interactions between plant bioactive molecules through molecular docking analysis. Notably, the results proposed that M. chamomilla-derived NCs retain various biological properties with impending applications in several areas, such as medicine and agriculture.