Silver nanoparticles (AgNPs) are increasingly used as bacteriostatic agents to prevent microbial growth. AgNPs are manufactured with a variety of coatings, and their potential impacts on wastewater treatment in general are poorly understood. In the present study, Nitrosomonas europaea, a model ammonia oxidizing bacterium, was exposed to AgNPs with citrate, gum arabic (GA), and polyvinylpyrrolidone (PVP). GA and citrate AgNPs inhibited nitrification most strongly (67.9 ± 3.6% and 91.4 ± 0.2%, respectively at 2 ppm). Our data indicate that Ag(+) dissolution and colloid stability of AgNPs were the main factors in AgNP toxicity. In general, low amounts of dissolved Ag initially caused a post-transcriptional interruption of membrane-bound nitrifying enzyme function, reducing nitrification by 10% or more. A further increase in dissolved Ag resulted in heavy metal stress response (e.g., merA up-regulation) and ultimately led to membrane disruption. The highest effect on membrane disruption was observed for citrate AgNPs (64 ± 11% membranes compromised at 2 ppm), which had high colloidal stability. This study demonstrates that coating plays a very important role in determining Ag dissolution and ultimately toxicity to nitrifiers. More research is needed to characterize these parameters in complex growth media such as wastewater.