Ferromagnetic nanoparticles when dispersed in a dielectric ceramic matrix offer a new series of percolation composites with a metal-semiconductor or insulator interface that tailors the functional properties. In this purview, ZrO2 of a high dielectric constant (εr) is stabilized in a cubic (c) polymorph by incorporating CrO2 of strongly ferromagnetic nanoparticles. A selective composition 20 CrO2–80ZrO2 is synthesized after heating a polymer precursor with glycerol at 500°C–800°C in air for 2 h. Broadening of X-ray diffraction peaks reveals Cr4+:c-ZrO2 with an average crystallite size 5 nm in the 500°C heated sample and that is grown to 8 nm on increasing the temperature to 800°C. They occur as bundles of thin platelets in electron microscopic images. Both the samples have ferromagnetic hysteresis loops with 794 and 211 Oe of coercivities, respectively. Variations of εr-value and the power loss are studied as a function of frequency f (50 Hz–100 kHz range) on cold-pressed pellets at selective temperatures, in the 30°C–500°C range, in describing the effects of the magnetic species.