Magnesium oxide nanoparticles (MgO NPs) are straightforward, cheap, biocompatible, and biodegradable, making them one of the most popular inexpensive and non-toxic nanoparticles. In addition, Nanosized chromic oxide (Cr2O3) is a significant transition metal oxide due to its numerous exceptional attributes, it finds application in several domains. It has good electrical conductivity, excellent thermal and chemical stability. It is utilized in several industries for its ability to resist oxidation at high temperatures, as well as its application in refractory materials and catalysts. In this study, we utilized a laser ablation approach to synthesize a ternary nanocomposite composed of MgO and Cr2O3 nanoparticles as it is considered a clean method for the preparation of nanoparticles. Subsequently, these nanoparticles were integrated into Chitosan (CS) solution to create polymer nanocomposite via casting route. XRD confirmed the formation of Cr2O3 nanocrystals with size of 61 nm dispersed in chitosan/MgO matrix. FTIR verified the interactions between chitosan, MgO, and Cr2O3 nanoparticles. The broadening and shifting of the OH and NH bands with increasing Cr2O3 content confirms the interaction and complexation between Cr2O3 and Chitosan/MgO. UV–Vis analysis revealed that incorporating 7 wt% Cr2O3 reduced optical band gap from 5.59 eV for chitosan to 3.91 eV. The band gap values decreased with increasing Cr2O3 content due to polaronic defects. TGA showed improved thermal stability, with the 7 wt% Cr2O3 nanocomposite exhibiting a residual mass of 47 % at 700 °C compared to 28 % for chitosan. Dielectric studies demonstrated high dielectric constant and conductivity (10−5 S/cm at 10 Hz) values for the 7 wt% Cr2O3 nanocomposite, attributed to interfacial polarization effects and nanocapacitor formation by the conductive nanofillers. The ternary chitosan/MgO/Cr2O3 nanocomposites with tunable optical, thermal and electrical properties show promising potential for electronic applications.