Exploring and investigating the strategies to improve quantum efficiency and photostability of light‐emitting polymers in polymer light‐emitting diodes is significantly an important topic of research. Thus this study endeavours towards the determination of the role of molecular orbital energy levels of metal oxide nanoparticles on the performance characteristics of hybrid nanocomposites. This work attempts to vary the proportions of zirconium dioxide (ZrO2) nanoparticles in nanocomposites of poly[2‐methoxy‐5‐(2’‐ethylhexyloxy)‐1,4‐phenylenevinylene] (MEH‐PPV), which leads to a six‐fold enhancement of luminescence quantum efficiency and increased radiative recombination rate due to an appropriate energy level alignment. An improvement in photostability was also reported due to a reduction in polymer chain defects, inhibition of moisture intervention and most importantly, impediment of the photo‐oxidation by controlling the triplet exciton dynamics. Thus, efforts are made to validate the role of energy levels of ZrO2 nanoparticles in improving the luminescence quantum efficiency and photostability of MEH‐PPV compared to ZnO incorporated MEH‐PPV.