There has been a recent surge in the use of silver as an antimicrobial agent in a wide range of domestic and clinical products, intended to prevent or treat bacterial infections and reduce bacterial colonization of surfaces. It has been reported that the antibacterial and cytotoxic properties of silver are affected by the assay conditions, particularly the type of growth media used in vitro. The toxicity of Ag to bacterial cells is comparable to that of human cells. We demonstrate that biologically relevant compounds such as glutathione, cysteine and human blood components significantly reduce the toxicity of silver ions to clinically relevant pathogenic bacteria and primary human dermal fibroblasts (skin cells). Bacteria are able to grow normally in the presence of silver nitrate at >20-fold the minimum inhibitory concentration (MIC) if Ag and thiols are added in a 1:1 ratio because the reaction of Ag with extracellular thiols prevents silver ions from interacting with cells. Extracellular thiols and human serum also significantly reduce the antimicrobial activity of silver wound dressings Aquacel-Ag (Convatec) and Acticoat (Smith & Nephew) to Staphylococcus aureus, Pseudomonas aeruginosa and Escherichia coli in vitro. These results have important implications for the deployment of silver as an antimicrobial agent in environments exposed to biological tissue or secretions. Significant amounts of money and effort have been directed at the development of silver-coated medical devices (e.g. dressings, catheters, implants). We believe our findings are essential for the effective design and testing of antimicrobial silver coatings.