Poly(N-isopropylacrylamide-co-allyl acetic acid) [p(NIPAM-co-AAAc)] microgels were synthesized in aqueous medium by free radical emulsion polymerization using N-isopropylacrylamide as monomer, allylacetic acid as comonomer, and N,N-methylene-bis-acrylamide as cross-linker. Silver nanoparticles were fabricated inside the microgels by in situ reduction of silver ions. Microgels were analyzed by UV-visible spectroscopy, FTIR, XRD, TEM, and DLS. The formation of silver nanoparticles was con firmed by UV-visible spectroscopy. UV-visible spectra of the Ag-poly(N-isopropylacrylamide-co-allyl acetic acid) hybrid microgels showed a prominent absorption peak at about 411 nm. This peak was due to the surface plasmon resonance effect of silver nanoparticles. The hybrid microgels were used as catalyst for the reduction of nitroarenes. The reduction reactions were found to be first order with respect to nitroarenes with the values of apparent rate constant (k(app)) equal to 0.248, 0.215, and 0.089 min(-1) for 4-nitrophenol, 4-nitroaniline, and nitrobenzene respectively at 27 degrees C in aqueous medium. Silver nanoparticles were found to be a more effective and efficient catalyst for reduction of 4-nitrophenol and 4-nitroaniline as compared to nitrobenzene.