Dielectric properties of mechanically treated AgI are studied within the frequency range 20 Hz-l MHz. Contribution of the electrode polarization was eliminated and the dielectric permittivity of polycrystalline AgI was extracted. Dielectric properties of mechanically treated AgI are typical of relaxer ferroelectrics with low-frequency dielectric constant epsilon(s)/epsilon(0) ranging from 30 to 200 and high-frequency limit epsilon/epsilon(0) = 8+/-2 close to the dielectric constant of beta-AgI single crystals. Non-linear correlation between conductivity and epsilon(s) holds, ageing or heating lead to decrease of the both. Results are interpreted by formation of polytypes due to the mechanical treatment. The polytypes formed seem to be electrically active. High values of epsilon(s) are assumed to be caused by polarization of space charges accumulated on boundaries of electric domains existing in the polytypes.