This study explores the synthesis of polyaniline-aluminum oxide nanoparticle (PANI-Al₂O₃ NPs) hybrid nanocomposites. An optimized electrochemical polymerization technique was employed to incorporate varying concentrations (5, 10, 15, and 20 wt.%) of Al₂O₃ NPs into the PANI matrix. Comprehensive characterization focused on structural, dielectric, and optical properties, both linear and nonlinear. Williamson-Hall (W-H) analysis revealed average crystallite sizes ranging from 57 nm for pure PANI to 119 nm for 20 wt.% Al₂O₃ nanocomposites. The initial incorporation of a small amount of Al₂O₃ NPs reduced crystallite size, indicating interactions with PANI chains. However, further addition of Al₂O₃ NPs reversed this trend, resulting in increased crystallite size due to NPs aggregation. The Urbach energy, which reflects the width of the tail of localized states in the band gap, increased from 446 meV for pure PANI to 528 meV for 20 wt.% Al₂O₃. Optical bandgap energies showed a slight decrease from 2.56 eV to 2.53 eV for Eg1 and from 3.70 eV to 3.85 eV for Eg2 as Al₂O₃ concentration increased. Furthermore, the plasma frequency resonance (ωₚ) of the materials decreased from 6.68×109 Hz for pure PANI to 3.69×109 Hz for 20 wt.% Al₂O₃, highlighting the impact of Al₂O₃ incorporation on electronic properties. Quantitative evaluation of optical properties revealed substantial improvements. The third-order nonlinear susceptibility (χ³) increased from 2.5 × 10−11 to 7.7 × 10−11 e.s.u. at 15 wt.% Al₂O₃, and the nonlinear refractive index (n₂) increased from 5.8 × 10−10 to 1.9 × 10−9 e.s.u. These findings underscore the potential of Al₂O₃ NPs in enhancing the physical and optical properties of PANI, establishing these nanocomposites as promising candidates for advanced optoelectronic applications.