A low-temperature solution combustion method was used to synthesize α-Fe2O3 nanoparticles. Magnetic polyvinyl alcohol (PVA)/α-Fe2O3/NaCl nanocomposites were prepared by solvent cast method. The Fourier transform infrared (FTIR) spectroscopy and scanning electron microscopy (SEM) results are in confirmation with X-ray diffraction (XRD) results indicating the formation of nanocomposites. The microcrystalline parameters, crystallite size (<N>), lattice strain (g in %), stacking faults (α d ), and twin faults (β) of prepared polymer nanocomposites were evaluated by whole-pattern fitting technique. The refinement was carried out using the computed microstructural parameters in which the twin faults and stacking faults did not vary much and statistical deviation was less than 5 %. Positron annihilation lifetime spectroscopy (PALS) was used for microstructural characterization. PALS results show that the ortho-positronium (o-Ps) lifetime (τ3) increases gradually as a function of nanoparticle concentration and about 219 ps increase observed from1.50 to1.71 ns at 3 wt%. This indicates the increase of free volume hole size (V f ) from 54.47 to 72.18 Å3. The o-Ps intensities (I 3) decrease indicating the inhibition of o-Ps formation upon incorporation of nanoparticles into PVA. The increase in I 2 values suggests the increased annihilation at the interface region. Positron lifetime parameters, viz., o-Ps lifetime, and its intensities indicate the effect of quenching and inhibition upon incorporation of metal oxide nanoparticles and inorganic salt into PVA.