Nanocomposite films grown by incorporating varying concentrations of Yttrium, a d-block rare-earth ion, into the binary chalcogenide Arsenic selenide host matrix is here presented. Films were grown via the wet-chemical electro-deposition technique and characterized for structural, optical, surface morphology, and photoluminescence (PL) properties. The X-ray Diffraction (XRD) result of the host matrix (pristine film) showed films of monoclinic structure with an average grain size of 36.2 nm. The composite films, on the other hand, had both cubic YAs and tetragonal YSe structures with average size within 36.5–46.8 nm. The fairly homogeneous nano-sized films are shown by the Scanning Electron Microscopy (SEM) micrographs while the two phases of the composite films present in the XRD patterns were confirmed by the Raman shifts due to the cleavage of the As-Se host matrix and formation of new structural units. The refractive index peaked at 2.63 within 350–600 nm. The bandgap energy lies in the range of 3.84–3.95 eV with a slight decrease with increasing Y addition; while the PL spectra depict emission bands across the Vis-NIR spectral regions. Theoretically, the density functional theory (DFT) simulations provided insight into the changes induced in the structure, bonding, and electronic properties. Besides reducing the bandgap of the As2Se3, the yttrium addition has induced a lone pair p-states of Se contributing nearby to Fermi energy level. The optical constants, and structural and electronic features of the films obtained present suitable features of film for IR applications as well as in optoelectronics.