The potential application of colloidal polyaniline (PANI) as an antimicrobial is limited by challenges related to solubility in common organic solvents, scalability, and antimicrobial potency. To address these limitations, we introduced a functionalized PANI (fPANI) with carboxyl groups through the polymerisation of aniline and 3-aminobenzoic acid in a 1:1 molar ratio. fPANI is more soluble than PANI which was determined using a qualitative study. We further enhanced the solubility and antimicrobial activity of fPANI by incorporating Ag nanoparticles onto the synthesized fPANI colloid via direct addition of 10 mM AgNO3. The improved solubility can be attributed to an approximately 3-fold reduction in size of particles. Mean particle sizes are measured at 1322 nm for fPANI colloid and 473 nm for fPANI-Ag colloid, showing a high dispersion and deagglomeration effect from Ag nanoparticles. Antimicrobial tests demonstrated that fPANI-Ag colloids exhibited superior potency against Gram-positive Staphylococcus aureus, Gram-negative Escherichia coli, and Bacteriophage PhiX 174 when compared to fPANI alone. The minimum bactericidal concentration (MBC) and minimum virucidal concentration (MVC) values were halved for fPANI-Ag compared to fPANI colloid and attributed to the combination of Ag nanoparticles with the fPANI polymer. The antimicrobial fPANI-Ag colloid presented in this study shows promising results, and further exploration into scale-up can be pursued for potential biomedical applications.