Lithium zinc ferrite - silica nanocomposites; with a formula [Li0.5−x/2ZnxFe2.5−x/2O4]30%[SiO2]70%, have been synthesized using ultrasonic assisted sol-gel auto combustion method. Thrust of the study is to investigate effect of zinc substitution in lithium ferrite (dispersed in silica matrix) on structural, optical, electrical and magnetic properties. X-ray diffraction (XRD), UV Visible (UV-Vis), Transmission Electron Microscopy (TEM), Complex Impedance Spectroscopy (CIS) and Vibrating Sample Magnetometry (VSM) have been employed to investigate the samples. XRD patterns confirm the phase purity and revealed that incorporation of Zn2+ at Li+ sites expand the unit cell dimensions from 8.3281 Å to 8.4398 Å, strain and crystallite size escalates from 0.29 to 1.42 and 18.28–27.50 nm respectively. Results from TEM and XRD match well indicating least agglomeration. Optical bandgap and refractive index show a significant effect on increasing zinc content. The impedance (Z) is found to reduce with increase in Zn2+ and may be attributed to enhancement in crystal boundaries. Dielectric properties were explored using cole-cole theoretical fitting of permittivity (ε), universal dielectric response (UDR) model, Koop’s theory and Maxwell–Wagner (M-W) mechanism. Complex electrical modulus (M*) formulation has been employed to explore the transport mechanism. Cole-cole plots in M* reveal that all the samples, except x = 0.50, show relaxation originating from grain boundaries whereas x = 0.50 sample shows contributions from both, grain and grain boundaries. Equivalent circuits have been derived using M* spectrum and are presented with circuit parameters. Frequency dependent AC conductivity (σac) curves have been fitted successfully using Jonscher’s power law; σac for a typical sample x = 0.50 was fitted using double power law. All samples have η ≤ 1, confirming correlated barrier hopping (CBH) mechanism of conductivity. Present system exhibits lower dc conductivity due to highly resistive silica in the samples. Magnetic properties have been studied using Vibrating Sample Magnetometry (VSM). Zn2+ substitution has a significant impact on magnetization due to migration of cations.