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In recent times, there has been an ever-growing need for polymer-based multifunctional materials for electronic packaging applications. In this direction, epoxy-Al2O3 nanocomposites at low filler loadings can provide an excellent material option, especially from the point of view of their dielectric properties. This paper reports the dielectric characteristics for such a system, results of which are observed to be interesting, unique, and advantageous as compared to traditionally used microcomposite systems. Nanocomposites are found to display lower values of permittivity/tan delta over a wide frequency range as compared to that of unfilled epoxy. This surprising observation has been attributed to the interaction between the epoxy chains and the nanoparticles, and in this paper this phenomenon is analyzed using a dual layer interface model reported for polymer nanocomposites. As for the other dielectric properties associated with the nanocomposites, the nano-filler loading seems to have a significant effect. The dc resistivity and ac dielectric strength of the nanocomposites were observed to be lower than that of the unfilled epoxy system at the investigated filler loadings, whereas the electrical discharge resistant properties showed a significant enhancement. Further analysis of the results obtained in this paper shows that the morphology of the interface region and its characteristics decide the observed interesting dielectric behaviors.