A high water retention membrane is developed by co-assembling poly(ethylene glycol) (PEG) grafted activated carbon (AC-PEG) with Nafion. The AC-PEG is prepared via a sol gel process. The use of PEG as a transporting medium in AC-PEG shows a largely improved water retention ability, a higher proton conductivity and a reduced swelling ratio, making it well suited for proton exchange membrane fuel cells (PEMFCs). Further, the composite membranes show improved mechanical properties at high temperature, thus ensuring the structural stability of membranes during the fuel cell operation. Compositional optimized AC-PEG/Nafion composite membrane (15 wt% compared to Nafion) demonstrates a better performance than the commercially available counterpart, Nafion 212, in fuel cell measurements. To identify the key factor of the improved performance, current interrupt technique is used to quantitatively verify the changes of resistance under different relative humidity environment. Copyright (C) 2013, Hydrogen Energy Publications, LLC. Published by Elsevier Ltd. All rights reserved.