A bacterial mediated synthesis of copper/copper oxide nanoparticle composite is reported. A Gram-negative bacterium belonging to the genus Serratia was isolated from the midgut of Stibara sp., an insect of the Cerambycidae family of beetles found in the Northwestern Ghats of India. This is a unique bacterium that is quite specific for the synthesis of copper oxide nanoparticles as several other strains isolated from the same insect and common Indian mosquitoes did not result in nanoparticle formation. By following the reaction systematically, we could delineate that the nanoparticle formation occurs intracellularly. However, the process results in the killing of bacterial cells. Subsequently the nanoparticles leak out as the cell wall disintegrates. The nanoparticles formed are thoroughly characterized by UV-Vis, TEM, XRD, XPS and FTIR studies.