In the present study the effect of addition of Al/Fe2O3 based energetic nanocomposites (ENC) to non‐aluminized and aluminized propellants was investigated. Comparative study was carried out using n‐Fe2O3 as burn rate catalyst. Ferric oxide xerogel and Al/Fe2O3 ENC were synthesized by sol‐gel method. The dried xerogel was characterised by Scanning electron microscopy (SEM), Transmission electron microscopy (TEM), X‐ray diffraction (XRD) and X‐ray photoelectron spectroscopy (XPS). TEM and SEM images reveal presence of porous interconnected ferric oxide clusters of size 3–5 nm and intimate mixing of the ingredients at nanoscale in case of ENC. XRD analysis shows amorphous nature of the ferric oxide xerogel. Fe2O3 and FeO(OH) are the major constituents (>84 %) of the xerogel as confirmed by XPS analysis. Thermal analysis of the ENC indicates that the composition is energetic in nature. Sensitivity analysis was carried out to assess the safety of the ENC during propellant processing. The differential scanning calorimetry (DSC) results for propellant samples show that the Al/Fe2O3 ENC is a better catalyst for AP decomposition than n−Fe2O3. Burn rate studies of ENC catalyzed propellants with μ‐Al and with n‐Al were carried out using acoustic strand burner. The results indicate that ENCs can be promising catalysts for composite propellants.