Synthetic polymers are widely employed for bone tissue engineering due to their tunable physical properties and biocompatibility. Inherently, most of these polymers display poor antimicrobial properties. Infection at the site of implantation is a major cause for failure or delay in bone healing process and the development of antimicrobial polymers is highly desired. In this study, silver nanoparticles (AgNps) were synthesized in polycaprolactone (PCL) solution by in-situ reduction and further extruded into PCL/AgNps filaments. Customized 3D structures were fabricated using the PCL/AgNps filaments through 3D printing technique. As demonstrated by scanning electron microscopy, the 3D printed scaffolds exhibited interconnected porous structures. Furthermore, X-ray photoelectron spectroscopy analysis revealed the reduction of silver ions. Transmission electron microscopy along with energy-dispersive X-ray spectroscopy analysis confirmed the formation of silver nanoparticles throughout the PCL matrix. In vitro enzymatic degradation studies showed that the PCL/AgNps scaffolds displayed 80% degradation in 20 days. The scaffolds were cytocompatible, as assessed using hFOB cells and their antibacterial activity was demonstrated on Escherichia coli. Due to their interconnected porous structure, mechanical and antibacterial properties, these cytocompatible multifunctional 3D printed PCL/AgNps scaffolds appear highly suitable for bone tissue engineering.