The generation of micronano bubbles (MNBs) typically relies on cavitation processes. However, discharge inside an underwater bubble causes bubble deformation, providing a new avenue for MNB formation. This study introduces a novel mechanism for micronano bubbles (MNB) generation through self-sustained discharge processes with underwater bubbles. High-speed imaging reveals the dynamic interplay between spark discharge formation and bubble structural evolution. A local thermal equilibrium (LTE) plasma model provides insights into the thermal and electrical dynamics during bubble rupture. The model demonstrates that, local temperature increases, up to 1750 K of a plasma gas temperature, resulting from discharge streamer activity within bubble cavities. Velocity streamlines near the bubble neck following its expansion at elevated temperatures indicate the initial position of the bubble breakup. The MNBs significantly enhance the dissolution and generation of reactive species, including O3 and H2O2 in the solution, highlighting their potential to enhance interfacial reactions and water disinfection applications.