Nanocomposite film of poly(vinyl alcohol) (PVA) incorporated with bacterial cellulose nanocrystals (BCNCs) and magnetite nanoparticles (Fe3O4) is reported in this study. The BCNC-Fe3O4 nanoparticles and PVA film was prepared by in situ synthesis technique using chemical co-precipitation. Different concentrations of BCNC-Fe3O4 (20%, 40% and 60% w/w) were mechanically dispersed in PVA solution to form the nanocomposite film. Transmission electron microscopy (TEM) analysis of BCNC-Fe3O4 nanoparticles showed irregular particle sizes ranging from 4.93 to 30.44 nm with an average size distribution of 22.94 nm. The presence of characteristic functional groups of PVA, BCNC and Fe3O4 were confirmed by Fourier transform infrared (FTIR) spectroscopy and X-ray diffraction (XRD) analysis. Scanning electron microscope (SEM) attached energy dispersive spectroscopy (EDS) and vibrating sample magnetometer (VSM) analysis revealed that, the iron content and magnetic property increased with increasing BCNC-Fe3O4 content. The saturation magnetizations (MS) value increased from 5.14 to 11.56 emu/g. The PVA/ BCNC-Fe3O4 at 60% showed the highest Young’s modulus value of 2.35 ± 0.16 GPa. The prepared film could be a promising polymeric nanomaterial for various magnetic-based applications and for the design of smart electronic devices.