Metal and metalloid nanoparticles (NPs) have attracted substantial attention from research communities over the past few decades. Traditional methodologies for NP fabrication have also been intensely explored. However, drawbacks such as the use of toxic agents and the high energy consumption involved in chemical and physical processes hinder their further application in various fields. It is well known that some bacteria are capable of binding and concentrating dissolved metal and metalloid ions, thereby detoxifying their environments. Bioinspired fabrication of NPs is environmentally friendly and inexpensive and requires only low energy consumption. Some biosynthesized NPs are usually used as heterogeneous catalysts in environmental remediation and show higher catalytic efficiency because of their enhanced biocompatibility, stability and large specific surface areas. Therefore, bacteria used as nanofactories can provide a novel approach for removing metal or metalloid ions and fabricating materials with unique properties. Even though a wide range of NPs have been biosynthesized, and their synthetic mechanisms have been proposed, some of these mechanisms are not known in detail. This review focuses on the synthesis and catalytic applications of NPs obtained using bacteria. The known mechanisms of bioreduction and prospects in the design of NPs for catalytic applications are also discussed.