Colorimetric, fluorescence, and paper-based method were developed to measure the Hg2+ level in water using iturin A, a lipopeptide produced by Bacillus subtilis. Firstly, iturin was used to synthesize highly stable and uniformly sized silver nanoparticles (AgNPs). Secondly, the iturin-AgNPs were found to be highly selective and sensitive to Hg2+. The absorbance of the reaction system showed a good linear correlation with the Hg2+ concentration from 0.5 to 5 mg/L at 450 nm in the UV-Vis spectroscopy detection with the limit of detection (LOD) of 0.5 mg/L. When the reaction system was detected by fluorescence measurement, a good linear relationship was found between the fluorescence intensity and Hg2+ concentration from 0.05 to 0.5 mg/ at 415 nm with the LOD of 0.05 mg/L. Lastly, a paper-based detection method was developed. The developed method was successfully used to detect Hg2+ in contaminated polluted waters and showed acceptable results in terms of sensitivity, selectivity and stability. The paper-based method could distinguish Hg2+ at levels higher than 0.05 mg/L, thereby meeting the guidelines of the effluent quality standard for industries (0.05 mg/L). In summary, this method can be used daily by various industries to monitor the Hg2+ level in effluent water.