Abstract Nanocolloidal polypyrrole/poly(styrene sulfonate) PPy:PSS composites were prepared by dispersion polymerization of pyrrole with 0.5 wt%, 1 wt%, 2.5 wt%, 5 wt%, 10 wt% and 15 wt% of PSS. Higher doping level of PPy was confirmed with increased S/N value of elemental analysis. Morphological variations of PPy composite matrix based on PSS were analyzed in which spherical shaped PPy particles of 20–40 nm were obtained for 1:1 wt% of PPy:PSS. Presence of higher concentration of PSS within the PPy matrix substantially improved its thermal stability. Dielectric properties were investigated using complex impedance analyzer as a function of frequency (50 Hz–5 MHz) and temperature between 30°C and 120°C. PPy, with improved dispersion, showed higher dielectric constant values up to 15 wt% of anionic polyelectrolyte PSS and the dielectric loss varied between 4.7 and 7.9 for different wt% of PSS. AC conductivity (σac) enhanced up to 1:1 wt% of PPy:PSS composite, which is found to be the optimum wt% in this study. DC conductivity was found to decrease after 1:1 wt% of PPy:PSS composite, which is due to excess oxidation, leading to reduced π conjugation of PPy chains. Higher dielectric constant values of composite, with relatively low dielectric loss values, indicate their potential usage in the electric and electronic industry.