The blends of hydrophilic polymers polyvinyl alcohol (PVA) (50 %) and polyvinyl pyrrolidone (PVP) (50 %) composite incorporated with various ratio of cobalt oxide nanoparticles (Co3O4 NPs) has been prepared and characterized. The structural characteristics of the prepared films were investigated using X-ray diffraction (XRD), transmission electron microscopy (TEM), and Fourier transform infrared spectroscopy (FTIR). The XRD patterns confirmed the semi-crystalline nature of the PVA/PVP composite. It was also revealed that the degree of crystallinity decreased with increasing Co3O4 NPs content. FT-IR spectra confirm the interaction and complexation of Co3O4 NPs with PVA/PVP matrices. Optical parameters were determined by investigating the UV–Vis reflectance and transmittance spectra. As the amount of Co3O4 NPs increased, the band-gap values decreased, demonstrating the feasibility of Co3O4 NPs as band-gap-controlled optical materials for a variety of applications. As the concentration of Co3O4 NPs increases, leading to the presence of defect levels associated with the sample's density of localized states, the Eg value of the host matrix experiences a reduction, dropping from 5.25 to 4.03 eV for direct transitions and from 4.08 to 2.29 eV for indirect transitions. The conductivity and dielectric characteristics have improved after the addition of Co3O4 NPs. The σdc exhibited an increase from 4.76 × 10−8 to 3.67 × 10−5 Scm−1, while the frequency exponent S decreased from 0.82 to 0.74. Higher ε′′ values at lower frequencies were associated with amplified energy loss in the composite samples. Conversely, elevated ε′ values at lower frequencies were attributed to the prevailing impact of interfacial polarizations resulting from charge aggregation. Polarized films with the capacity to hold an electric charge are created by applying an electric field. Hence, these nanocomposites are suitable for application in flexible capacitors.