Conductive pyrrole monomer was grafted on vinyl modified sepiolite by surface initiated emulsion graft polymerization. Effect of process variables such as monomer, initiator, and surfactant on degree of grafting (%) were investigated. Maximum 745% degree of grafting was obtained at optimized grafting conditions. Structural changes in sepiolite by grafting of polypyrrole chains was confirmed by Fourier transform infrared spectroscopy and X‐ray diffraction techniques. Surface morphology of the grafted nanohybrid was investigated by scanning electron microscopy (SEM). Thermal studies were carried out to acquire information concerning thermal stability of the synthesized materials and it was found increasing with the increase in grafting (%) of polypyrrole in sepiolite grafted polypyrrole (MS‐g‐PPy). Complex impedance spectroscopic analysis was carried out to study the effects of grafting of PPy on the ac electrical properties of synthesized nanohybrid composite at ambient temperature in the frequency range of 0.5–107 Hz. The value of electrical conductivity was affected by degree of grafting (%) and maximum value of 0.85 × 10−4 S/cm was achieved. Both dielectric loss factor and permittivity increase with the decrease of frequency exhibiting strong interfacial polarization at low frequency.