The introduction of toxic chemicals into the environment can result in water pollution leading to the degradation of biodiversity as well as human health. This study presents a new approach of using metal oxides (Al2O3 and SiO2) modified with a plasmonic metal (silver, Ag) nanoparticles (NPs)-based nanofluid (NF) formulation for environmental remediation purposes. Firstly, we prepared the Al2O3 and SiO2 NFs of different concentrations (0.2 to 2.0 weight %) by ultrasonic-assisted dispersion of Al2O3 and SiO2 NPs with water as the base fluid. The thermo-physical (viscosity, activation energy, and thermal conductivity), electrical (AC conductivity and dielectric constant) and physical (ultrasonic velocity, density, refractive index) and stability characteristics were comparatively evaluated. The Al2O3 and SiO2 NPs were then catalytically activated by loading silver NPs to obtain Al2O3/SiO2@Ag composite NPs. The catalytic reduction of 4-nitrophenol (4-NP) with Al2O3/SiO2@Ag based NFs was followed. The catalytic efficiency of Al2O3@Ag NF and SiO2@Ag NF, for the 4-NP catalysis, is compared. Based on the catalytic rate constant evaluation, the catalytic reduction efficiency for 4-NP is found to be superior for 2% weight Al2O3@Ag NF (92.9 × 10−3 s−1) as compared to the SiO2@Ag NF (29.3 × 10−3 s−1). Importantly, the enhanced catalytic efficiency of 2% weight Al2O3@Ag NF for 4-NP removal is much higher than other metal NPs based catalysts reported in the literature, signifying the importance of NF formulation-based catalysis.