We demonstrate the use of aqueous-based layer-by-layer (LbL) processing and in situ nanoreactor chemistry for creating polyelectrolyte multilayer (PEM) nanocomposites in which the concentration of a nanoparticle species is modulated throughout the depth of the film in a complex way. Using the in situ growth of silver nanoparticles to selectively increase the refractive index of precisely defined regions of the PEM film, we have produced a digitized rugate filter, a special type of dielectric mirror possessing many thin layers that approximate a continuous, periodic refractive index profile. The design of the digital rugate from an initial smooth index profile was aided by a computer, and construction of the device was accomplished entirely by automated means. Poly(allylamine hydrochloride) (PAH) and poly(acrylic acid) (PAA) bilayer regions within the film supported subsequent nanoreactor chemistry and created the high refractive index regions of the film, while PAH and poly(styrenesulfonate) (PSS) bilayer regions remained unmodified and served as the low index regions. Spectroscopic results obtained from the assembled device confirm the presence of a reflection band that grows in amplitude with increasing silver incorporation, reaching a peak reflectance of 75% after five silver loading and exchange cycles. The rugate structure suppresses reflection sidebands, features common to Bragg reflectors and simpler dielectric mirror designs. Cross-sectional TEM reveals nanoscale control of the size and location of silver-containing domains within the PEM film. The ability of this method to control the placement of nanoparticles within PEMs enables the inexpensive, easy production of conformable optical coatings with tunable properties. In addition, these nanocomposite films may have applications in a number of other fields where precise control of effective gradients in physical properties throughout thin films has been shown to affect the overall performance in a desirable way.