The effect of ZnO nanoparticles on the structure and ionic relaxation of LiI salt doped poly(ethylene oxide) (PEO) polymer electrolytes has been investigated. X-ray diffraction, high resolution transmission electron microscopy and field emission scanning electron microscopy show that ZnO nanoparticles dispersed in the PEO-LiI polymer electrolyte reduce the crystallinity of PEO and increase relative smoothness of the surface morphology of the nanocomposite electrolyte. The electrical conductivity of the nanocomposites is found to increase due to incorporation of ZnO nanoparticles. We have shown that the structural modification due to insertion of ZnO nanoparticles results in the enhancement of the mobility i.e., the hopping rate of mobile Li+ ions and hence the ionic conductivity of PEO-LiI-ZnO nanocomposite electrolyte.