PANI/chitosan composite and a ternary composite comprising of PANI, chitosan, and reduced graphene oxide have been successfully synthesised and characterised using FTIR and UV-VIS spectroscopy. Optical constants of the composites were extracted from the UV-VIS spectra. The extracted parameters were applied in the simulation of a surface plasmon resonance (SPR) biosensor functionalised with PANI/chitosan and ternary composites. The aim was to explore the applicability of the composite-based SPR sensor in the detection of low-concentration acetone vapour within the range of 1.8 ppm–5.0 ppm for diabetes monitoring and screening. The functionalization of the SPR sensor with the PANI/chitosan and the ternary composites shows promising application of the sensor in the detection of acetone vapour at a low concentration down to less than 0.5 ppm. The maximum sensitivity values of about 60 and 180 degree/refractive index change were observed for PANI/chitosan and ternary composite sensing layers, respectively, in comparison with the bare gold-based SPR which shows no response up to 10 ppm concentration of acetone vapour in air. In addition, the two sensing layers show good selectivity to acetone vapour compared to ethanol, methanol, and ammonia. The response in the case of ternary composite shows better linearity with a correlation coefficient of 1.0 compared to PANI/chitosan- and gold-based SPR layers with 0.9999 and 0.9997, respectively.