ZrO₂ nanoparticles (ZrO₂ NPs) and Ag@ZrO₂ nanocomposite (Ag@ZrO₂ NCs) were prepared from zirconium (IV) butoxide in the absence of base or acid mineraliser by the advanced oxidation processes (AOP) and subsequent hydrothermal treatment. Samples were characterized by X-ray diffraction (XRD), transmission electron microscopy (TEM), scanning electron microscope (SEM), Raman, Photoluminescence (PL), Fourier transform infrared (FTIR), and diffuse reflectance spectroscopy (DRS). XRD and Raman analyses confirmed ZrO₂ NPs and Ag@ZrO₂ NCs tetragonal crystalline phase synthesized at 200 °C for 1 h. HRTEM images of ZrO₂ NPs and Ag@ZrO₂ NCs after treatment at 200 °C indicated small nanoparticles with characteristic size of 5–8 nm (ZrO₂) and 40–50 nm (Ag NPs). It was found that Ag@ZrO₂ NCs showed outstanding photocatalytic activity in photodegradation Rhodamine B dye compared with pure ZrO₂ NPs. Antibacterial activity tests of ZrO₂ NPs and Ag@ZrO₂ NCs were carried out using E. coli and S. aureus as model strains of Gram-negative and Gram-positive bacteria, respectively. Ag@ZrO₂ NCs were capable of efficiently growth inhibition of bacteria cultures in more than 75% E. Coli compared to ZrO₂ NPs that exhibited <10% instead. However, at the same concentration (for example 0.25 mg/mL) we found that both ZrO₂ NPs and Ag@ZrO₂ NCs were significantly more effective against S. aureus in comparison with E. coli showing bacterial growth inhibition higher than 90% for S. aureus. Morphological observation of bacterial cells by scanning electron microscopy (SEM) revealed that nanoparticles and nanocomposite caused irreversible damage to the cell membrane.