Surgical site infection associated with surgical instruments has always been a factor in delaying post-operative recovery of patients. The evolution in surface modification of surgical instruments can be a potential choice to overcome the nosocomial infection mainly caused by bacterial populations such as Staphylococcus aureus, Pseudomonas aeruginosa, and Escherichia coli. A study was, therefore, conducted characterising the morphology, hydrophobicity, adhesion strength, phase, Nano-hardness, surface chemistry, antimicrobial and biocompatibility of SS 316L steel deposited with a Nano-composite layer of Silver (Ag) and Tantalum oxide (Ta2O5) using physical vapour deposition magnetron sputtering. The adhesion strength of Ag/AgTa2O5 coating on SS 316L and treated at 250-850 °C of thermal treatment was evaluated using micro-scratch. The Ag/Ag-Ta2O5-400 °C was shown a 154% improvement in adhesion strength on SS 316L when compared with as-sputtered layer or Ag/Ag-Ta2O5-250, 550, 700 and 850 °C. The FESEM, XPS, and XRD indicated the segregation of Ag on the surface of SS 316L after the crystallization. Wettability and Nano-indentation tests demonstrated an increase in hydrophobicity (77.3 ± 0.3°) and Nano-hardness (1.12 ± 0.43 GPa) when compared with as-sputtered layer, after the 400 °C of thermal treatment. The antibacterial performance on Ag/Ag-Ta2O5-400 °C indicated a significant zone of inhibition to Staphylococcus aureus (A-axis: 16.33 ± 0.58 mm; B-axis: 25.67 ± 0.58 mm, p