Methyl blue (MB)-dyed polyethylene oxide (PEO) films were prepared by solution casting technique to study the concentration -dependent conductivity and relaxation mechanism. FTIR spectroscopy confirmed the polymer-dye interactions. XRD and DSC data revealed substantial structural modification such as decrease in degree of crystallinity and reduction in spherulites size of polymer matrix due to the addition of MB. Biphasic nature of these films was observed in SEM images. Impedance and polarization current studies confirmed the ion conduction dominance in the films. The addition of MB dye in PEO resulted in enhanced conductivity due to partial dissolution of the crystalline phase. Electrical conductivity as a function of temperature has been studied. The samples exhibited Arrhenius behavior with two different activation energies. The dielectric studies showed non-Debye type relaxation phenomenon. There was an increase of two orders of magnitude in the conductivity for highest dye concentration. These results are explained in terms of molecular disorder in the PEO-dye phase, heat of fusion, impedance spectra, modulus study and relaxation time.