In this work, the dielectric properties of lignocellulosic coirs coated with silver nanoparticles were studied. Nanosilver coating increased the dielectric constant (K) value and decreased the dissipation factor (Df). The increase in dielectric constant of the nanocomposite could be assigned to the stacking of charges at the extended interface of the synthesized nanocomposites. In the present study, a significant decrease in Df was witnessed which could be due to the well-established quantum effect of metal nanoparticles, more precisely known as the Coulomb blockade effect. It was found that the dielectric properties were influenced by the size and coating level of the metal nanoparticles in the nanocomposite and hydrophobicity of the fiber. The hydrophobicity of the fiber results in a uniform silver coating throughout the coir resulting in a large number of interfaces, thus increasing the interfacial polarization and K. However, these newly formed interfaces restrain the motion of charges, which decreases the Df. It is interesting to note that all the fibers that are coated with silver nanoparticles show improved thermal stability when compared with parent coir. More importantly, the sintering temperature can go as high as 600 °C or more for the silver nanoparticle coated coir fibers which are usually not possible for the embedded capacitors made with low-cost organic polymers for printed circuit board (PCB) industries. Due to higher packing density and insulating properties of these silver nanoparticle (AgNP) coated coir fibers, they are very important materials for embedded capacitors, optoelectronic devices, metal oxide semiconductor field effect transistors (MOSFETs), and integrated circuits.