Ultrasmall Ag NPs with different optical properties were synthesized by UV-irradiation method using chloramine T as an organic modifier. Two different formation mechanisms were identified for low and high concentration of chloramine T. It was confirmed that the use of low concentration of chloramine T allows the synthesis of highly reactive Ag NPs, whereas the use of high concentration of chloramine T results in the formation of crystalline AgCl. The performed catalytic investigation confirms that the proposed method can be used to synthesize nanoparticles with high catalytic activity for the reduction of methylene blue. It was noted that the rate constant over the total weight of the catalyst was equal to 8.34 g⁻¹ s⁻¹, which is significantly high in comparison with the literature data. This high catalytic activity was related to the defects on the surface of Ag NPs.