In this work, poly(N-isopropylmethacrylamide-co-acrylic acid) [p(NIPMAM-co-AAc)] microgels were synthesized by using precipitation polymerization method. Silver nanoparticles (AgNPs) were uniformly dispersed inside the sieves of the engineered microgels by in situ reduction method. Both microgels and hybrid microgels were characterized by Transmission Electron Microscopy (TEM), Ultraviolet-Visible (UV-Vis) spectroscopy and Fourier Transform Infrared (FTIR) spectroscopy. The average diameter of the fabricated AgNPs was found to be 15 nm. The catalytic reduction of 2-Nitroaniline (2-NA) was used as model reaction to investigate the catalytic activity of the hybrid microgels. The value of apparent rate constant (k(app)) for catalytic reduction of 2-NA was determined using pseudo first order kinetic model spectrophotometrically under various conditions of reaction to explore the mechanism of catalysis. The kinetic data reveals that catalytic reduction of 2-NA occurs according to Langmuir-Hinshelwood mechanism. The comparison of present study with previous literature makes our system a facile, efficient and stable catalyst for rapid and economical reduction of 2-NA in aqueous medium.