Bacillus subtilis widely exists in environment and shows a capability to deal with heavy metals and dyes in polluted waters by adsorption or biological oxidation and reduction. Little is known about the roles of lipopeptides in this capability of B. subtilis. In this study, we found that the lipopeptides produced by B. subtilis could reduce silver ions to silver nanoparticles (AgNPs) and iturin was identified as the major effective fraction. Furthermore, the synthesized AgNPs was successfully used to catalyze the reduction of organic dyes and reduce Pb2+ contamination in water. The formation of AgNPs was confirmed by the features analyzed by UV-vis spectroscopy, dynamic light scattering, high-resolution transmission electron microscopy (HR-TEM), and selected area electron diffraction (SAED). The formed AgNPs showed crystalline, with small size (similar to 20 nm) and spherical shape. The biosynthesis of AgNPs was significantly accelerated by UV irradiation. A pH of 10 resulted in the highest formation rate, while pH 9.2 provided the most stability of AgNPs. In mechanisms, tyrosine and the polypeptide were identified as the major groups in iturin-A to form AgNPs via Ar-OH groups. The study revealed that iturin played important roles for the capability of B. subtilis to treat polluted water via a possible way by synthesizing AgNPs and then catalyzing the reduction of organic dyes and reducing the contamination of Pb2+.