Microbial community functional diversity enhances the degradation of organic matter and pollutants in the environment, but there is a growing concern that these ecosystem services may be altered by the introduction of emerging environmental contaminants including silver nanoparticles (AgNPs) into aquatic systems. We added 0, 25, 50, 75, 100, and 125 mg L−1 (nominal concentrations) of citrate-AgNP and polyvinylpyrrolidone-AgNP (PVP-AgNP) each to freshwater sediment and examined their antimicrobial effects on microbial communities using community-level physiological profiling. The results showed that citrate-AgNP decreased the overall microbial catabolic activity by 80% from 1.16 ± 0.02 to 0.23 ± 08 while PVP-AgNP decreased the catabolic activity by 51% from 1.25 ± 0.07 to 0.61 ± 0.19 at 125 mg L−1. Citrate-AgNP and PVP-AgNP caused a statistically significant reduction in substrate richness and substrate diversity that decreased microbial functional diversity. AgNPs decreased microbial catabolic capability and functional diversity at concentrations ranging from 0.12 ± 0.04 to 0.43 ± 0.07 mg Ag kg-1 which are lower than the predicted concentrations in freshwater sediment. To our knowledge, this is the first study to demonstrate inhibition of microbial functional diversity by citrate-AgNP and PVP-AgNP in a pathogen impaired stream. Citrate-AgNP caused greater inhibition of carbon substrate utilization but amino acids, carbohydrates, and carboxylic acids were the most affected carbon groups which led to a shift in the metabolic fingerprint pattern of the microbial community. AgNPs decreased the catabolic capability and the ability of the microbial community to degrade organic matter and a variety of pollutants in the environment.