Herein, the highly multifunctional cotton fabric surfaces were designed with excellent coloration, UV-protection function, and antimicrobial activity. These multifunctional functions were developed by in-situ synthesis of silver nanoparticles (Ag NPs) into the cotton fabric surface using a simple green one-pot “UV-reduction” method. Cotton fabrics were pretreated with non-anionic detergent, immersed into alcoholic silver nitrate solution (concentration ranging from 100 to 500 ppm), squeezed to remove excess solution and then exposed to UV-irradiation (range 320–400 nm) for 1 h. The influence UV-irradiation on the thermal, chemical, optical and biological properties of the cotton fabric surface was discussed in details. The UV-irradiation promotes reducing of Ag+ ions and the cotton fabrics act as seed medium for Ag NPs formation by “heterogeneous nucleation”. Increasing Ag+ concentration (from 100 to 500 ppm) results in Ag NPs of particle size (distribution) of 50–100 nm. Interestingly, the Ag NPs exhibited different localized surface Plasmon resonance properties causing a coloration of the cotton fabrics with different color shades ranging from bright to dark brown with excellent color fastness properties. The treated cotton fabrics also show high protecting functions against UV-transmission (reduction of 65%) and Escherichia coli growth (99%). The side-effects of the UV-reduction process are further investigated.