In this study, Fe2O3 powder was synthesized using the co-precipitation method from scrap iron, which was then treated with varying concentrations of copper. Afterwards, the modified Fe2O3 was reinforced in the PVC matrix by using the solution-casting method to synthesize PVC composite films, which were subjected to a UV-visible spectrophotometer, a Fourier transform infrared spectrophotometer, an X-ray diffractometer, and a thermal gravimetric analyzer to evaluate the optical, chemical, structural, and thermal properties. FTIR analysis reveals the formation of the composite through vibrational bands pertaining to both components present, whereas no significant changes in the XRD patterns of PVC were observed after the doping of modified iron oxide, which reveals the compatibility of fillers with the PVC matrix. The optical properties of the copper-doped iron oxide-PVC composites, including absorbance, refractive index, urbach energy, and optical as well as electrical conductivity are measured, and show an increase in optical activity when compared to the pure PVC compound. Moreover, the increased thermal stability of the synthesized composite was also observed and compared with conventional compounds, which, in accordance with all the other mentioned properties, makes the copper-dopped iron oxide-PVC composite an effective material for electronic, photonic, and optical device applications.