The present work focused on the synthesis of polypyrrole (PPy) wrapped nano copper-alumina (Cu-Al2O3) composite by an in situ polymerization of pyrrole in the presence of Cu-Al2O3 nanoparticles. The polymerized samples were systematically characterized by Fourier transform infrared spectroscopy (FTIR), X-ray diffraction (XRD) analysis, scanning electron microscope (SEM), high-resolution transmission electron microscope (HR-TEM), differential scanning calorimetry (DSC), and thermogravimetric analysis (TGA). The properties such as AC and DC conductivity, dielectric constant, and ammonia gas sensing performance of PPy/Cu-Al2O3 composites were investigated in detail as a function of Cu-Al2O3 content. The FTIR spectra showed the existence of sharp and resolved infrared bands of nanoparticles in the PPy chain. The presence of the crystalline peaks of Cu-Al2O3 in the PPy matrix was confirmed from the XRD analysis. SEM images revealed the homogenous growth of Cu-Al2O3 in the polymer with the formation of spherically shaped particles. The HR-TEM observation showed that Cu-Al2O3 particles were dispersed at a nanometer level in the nanocomposites with a width of 30–60 nm. The glass transition temperature of composites obtained from DSC was found to be increased with increase in the content of nanoparticles. TGA analysis proved that the nano Cu-Al2O3 in the content in the composites acted as a mass transport barrier that retards the degradation of the product. The AC conductivity and dielectric constant of the nanocomposite showed that the maximum electrical properties were observed for the composite with 5 weight percentage loading of Cu-Al2O3. DC conductivity showed that the PPy/Cu-Al2O3 composites have higher electrical conductivity than PPy. The ammonia gas sensing property of the composites was significantly enhanced by the addition of Cu-Al2O3 nanoparticles. Therefore, the improved properties of synthesized PPy/Cu-Al2O3 nanocomposite can be useful for developing functional composite material for the fabrication of sensors, electronic devices, and high energy storage capacitors.