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Although nanocrystalline silver is used commercially to treat burns and wounds, the mechanisms of action (MOA) for its activity are not clear. The purposes of this work were to determine if nanocrystalline silver has anti-inflammatory activity, determine physicochemical properties critical for its MOA, and develop nanocrystalline silver-derived solutions for use in the treatment of lung diseases, including ARDS and pneumonia. In a porcine contact dermatitis model, nanocrystalline silver had anti-inflammatory activity independent of antimicrobial activity, with increased apoptosis induction in inflammatory cells, but not keratinocytes; decreased expression of TNF-, TGF-, IL-8, and MMPs; and increased expression of IL-4, EGF, KGF, and KGF-2. Treatment with AgNO3 (Ag+) increased inflammation, and caused apoptosis induction in keratinocytes. Thus, nanocrystalline silver releases additional species, perhaps Ag^(0)-containing clusters, resulting in anti-inflammatory activity. SIMS analysis showed significant deposition of Ag-clusters after nanocrystalline silver, but not AgNO3, treatment. Nanocrystalline silver had a systemic effect, despite SIMS analysis showing minimal skin penetration by silver, suggesting that nanocrystalline silver interacts with cells near tissue surfaces that release signals altering the inflammatory cascade. Relative to various Ag+-releasing dressings, nanocrystalline silver had significantly enhanced antimicrobial activity, Ag+-resistant bacteria kill, and was not prone to development of resistant bacteria, indicating that nanocrystalline silver releases antimicrobial species additional to Ag+, and has multiple bactericidal MOA. Single silver nanocrystals are inactive, and heat treatment of nanocrystalline silver resulting in crystallites over ~30 nm caused loss of antimicrobial activity, soluble silver, silver oxide, and oxygen. This indicates a poly-nanocrystalline silver structure is necessary for optimal antimicrobial activity, as is having silver oxide to pin the nanostructure, preventing its growth. While oxygen is necessary during sputtering to produce silver oxide, too much oxygen reduces antimicrobial activity, as silver oxide is predominantly deposited. Sufficient total silver, modifiable with current and time, is also important for activity. Nanocrystalline silver-derived solution properties vary significantly with dissolution conditions. Solutions generated at pH 4-6 have stronger antimicrobial activity, and solutions generated at pH 9 have stronger anti-inflammatory activity. Overall, nanocrystalline silver-derived solutions have biological properties similar to nanocrystalline silver, indicating that they may be useful in a variety of medical applications.