In the present work, structural and optical properties of Ag-polyvinyl alcohol (PVA) nanocomposite were studied using absorption spectroscopy, X-ray diffraction (XRD), transmission electron microscopy (TEM), field-emission scanning electron microscopy (FE-SEM) along with energy dispersive X-ray spectroscopy (EDAX), and photoluminescence (PL) spectroscopy. Optical properties such as absorption coefficient (alpha), refractive index (n) and dielectric constant (epsilon) have been calculated from absorption spectroscopy. It was found that refractive index of PVA increases with increasing concentration of Ag nanoparticles. Dispersion of refractive index has been analysed using the Wemple-DiDomenico single oscillator model and dispersion parameters (E-o and E-d) have been calculated. Current-voltage characteristics were analysed to explore carrier transport mechanisms in Ag-PVA nanocomposite. Analysis of changes in conductivity of PVA by varying the concentration of Ag nanoparticles has revealed Coulomb blockade phenomena and Frenkel-Poole emission conduction. (C) 2013 Elsevier B.V. All rights reserved.