The structural, morphological, thermal, dielectric and electrical conductivity properties of poly(diphenylamine) (PDPA)/zinc oxide (ZnO) nanocomposites, synthesized by in‐situ chemical polymerization technique, were systematically evaluated and characterized. The ammonia (NH3) gas sensing characteristics of composites were evaluated as a function of ZnO nanoparticle concentration. The Fourier transform infrared (FTIR) spectra of composites showed the characteristic band of ZnO nanoparticles at 418 cm−1 indicating an effective interaction between the polymer matrix and filler. The X‐ray diffraction (XRD) studies confirm the increased crystallinity in the PDPA structure when ZnO is incorporated. The uniform distribution of nanoparticles within the polymer matrix is confirmed by transmission electron microscopy (TEM) images. The differential scanning calorimetry (DSC) and thermogravimetric analysis (TGA) studies emphasize the shift in glass transition temperatures and enhanced thermal stability of composites relative to bare PDPA, which is further confirmed by the Coat‐Redfern method. Conductivity studies show a significant increase in magnitudes of real part of dielectric permittivity and dielectric loss tangent concerning filler content. The addition of 7 wt% ZnO nanoparticles to PDPA increases the room temperature AC conductivity from 1.058 × 10−5 to 7.8 × 10−4 S/cm. Moreover, the room‐temperature NH3 gas sensing property of PDPA/ZnO nanocomposites was accelerated by the addition of ZnO nanoparticles.