In this paper, a novel method of producing bi-metallic alloy nanoparticles at low temperatures using hydrogen bombardment of thin films, deposited on glass substrates, is introduced. Optical and morphological characteristics of the nanoparticles were extensively studied for various conditions of plasma treatment, such as plasma power density, temperature, duration of hydrogen bombardment, thickness of the initial thin metallic film etc. As an important application of fabricated alloy nanoparticles, humidity sensor based on the alloy nanoparticles was introduced. It was shown that Ag-Cu alloy nanoparticles ionizing ability of the fabricated alloy nanoparticle is higher than Ag and Cu nanoparticles. Scanning Electron Microscopy, Atomic Force Microscopy and Transmission Electron Microscopy were used to analyze the nanostructures.