Herein we have synthesised Gadolinium oxide doped Zinc oxide (Gd2O3@ZnO) by solution combustion method and incorporated it as a nanofiller into Polyvinyl alcohol (PVA) polymer matrix using solution intercalation technique to get PVA/Gd2O3@ZnO nanocomposite film. The X-ray diffraction (XRD), Scanning electron microscopy (SEM), Differential scanning calorimetry (DSC) and UV-Vis spectroscopy were used to investigate the structural, morphological, glass transition temperature and optical properties of synthesized nanocomposites respectively. The optical propertiesof PVA/Gd2O3@ZnO film shows the interaction of -OH groups in PVA and dopant. From DSC, it is clear that Tg of prepared nano composites increases with increasing in dopant concentration. XRD analysis showed that the crystalline characteristics of the nanocomposites increases with increase in dopant concentration. The UV-Visible spectra reveals that there is decrease in indirect band gap of PVA from 4.94 eV to 3.12 eV and direct band gap from 4.90eV to 3.03 eV compared to pristine PVA Gd2O3@ZnO doped nanocomposite films showed multifold enhancement in optical characteristics such as refractive index of PVA doped nanocomposites compared pristine PVA, optical conductivity, finess coefficient, extinction coefficient on increasing in dopant concentration (0%, 2%, 4%, 6% and 8wt%). The optical characteristics of PVA/Gd2O3@ZnO nanocomposite films show excellent UV-blocking behaviour suggesting that, they are promising materials for optical devices.