Biosynthesis of gold nanoparticles has been accomplished via reduction of an aqueous chloroauric acid solution with the dried biomass of an edible freshwater epilithic red alga, Lemanea fluviatilis (L.) C.Ag., as both reductant and stabilizer. The synthesized nanoparticles were characterized by UV-visible, powder X-ray diffraction (XRD), transmission electron microscopy (TEM), Fourier transform infrared (FT-IR), and dynamic light scattering (DLS) studies. The UV-visible spectrum of the synthesized gold nanoparticles showed the surface plasmon resonance (SPR) at around 530 nm. The powder XRD pattern furnished evidence for the formation of face-centered cubic structure of gold having average crystallite size 5.9 nm. The TEM images showed the nanoparticles to be polydispersed, nearly spherical in shape and have sizes in the range 5-15 nm. The photoluminescence spectrum of the gold nanoparticles excited at 300 nm showed blue emission at around 440 nm. Gold nanoparticles loaded within the biomatrix studied using a modified 2,2-diphenyl-1-picrylhydrazyl (DPPH) method exhibited pronounced antioxidant activity.