Polyaniline/silver (PANI/Ag) nanocomposite was prepared by chemical oxidative polymerization of aniline monomer in the presence of nitric acid. The formation of PANI/Ag nanocomposite was characterized by XRD, FTIR, TEM, UV-vis spectroscopy. The XRD patterns indicated that the crystalline phase of Ag is cubic with crystallite size of 93 nm. The TEM image shows that the Ag nanoparticles are well dispersed in the polyaniline matrix. Optical measurements show that the value of optical band gap of nanocomposite is lower than that of pure PANI. The DC-, AC-conductivities, dielectric permittivity (') and dielectric loss ('') of (PANI/Ag) nanocomposite and pure PANI have been measured in the temperature range from 303 to 723 K and frequency range from 10 to 103 kHz. The electrical conductivity of the (PANI/Ag) nanocomposite is higher than pure PANI. Temperature variation of frequency exponents in this blend sug-gests that AC-conductivity is attributed to correlated barrier hopping mechanism. At all frequencies, the ' value for (PANI/Ag) nanocomposite is higher than that for pure one. The higher dielectric constant of the PANI/Ag nanocompo-site indicates their better ability to store electric potential energy under the influence of alternative electric field.