Novel nanocomposites of polyaniline dispersed with gamma-Fe2O3 nanoparticles were prepared by the in situ polymerization of aniline in the presence of ammonium peroxysulfate as an oxidizing agent. Dielectric constants of the derived composites varied with the composition of gamma-Fe2O3 present in the matrix. A maximum dielectric constant of similar to 5500 was achieved when 10 mass % gamma-Fe2O3 nanoparticles were present. Nanocomposites were characterized by X-ray diffraction, Fourier transform infrared, scanning electron microscopy, and thermal analytical techniques. Conductivity increased marginally by increasing the amount of gamma-Fe2O3 in the matrix. Dielectric constants increased 100-150 times compared to plain polyaniline matrix and were 20-40 times higher than that of gamma-Fe2O3 nanoparticles. (C) 2005 Wiley Periodicals, Inc.