A novel two-phase polymer nanocomposite film comprising of polyvinylidene fluoride (PVDF) and nanocrystalline (similar to 90 nm) semiconducting multiferroic BiFeO3 (BFO) have been fabricated by hot-molding technique. Such flexible thick nanocomposite films, semicrystalline in nature, exhibited extraordinarily high effective dielectric permittivity eeff similar to 103 (compared with that of pure PVDF) near the low percolation threshold (fc = 0.12) at room temperature (RT) and the films also possessed low dielectric loss (similar to 0.18). The polarization-electric field (P-E) hysteresis loops are displayed at RT, which indicate ferroelectric like behavior of PVDF still persists in the percolative nanocomposite. There is also large increase of remanent polarization of BFO in the composite indicating improvement of the multiferroic behavior of BFO embedded in the PVDF polymer. The sample also indicates good fatigue endurance. Formation of microcapacitors and percolative behavior are correlated to explain the obtained results based on the special geometry of the BFO nanofillers. (C) 2012 Wiley Periodicals, Inc. J Polym Sci Part B: Polym Phys, 2012