Monodispersed core-shell type ZnO:Ag nanoparticles were synthesized by a polymer precursor method and their structural and electrical properties were reported in detail. The synthesis technique involves a sol-gel type chemical reaction between aqueous solutions of poly-vinyl alcohol (PVA), sucrose and Zn²⁺ salt. The Zn²⁺-PVA-sucrose polymer precursor powders so obtained after the reaction was further explored for the synthesis of ZnO:Ag nanoparticles. The key part of the work lies in the use of polymer coated ZnO nanoparticles as templates to obtain the ZnO core-Ag shell type nanostructures. Structural and spectroscopic analyses of the derived samples were performed with X-ray diffraction (XRD), energy dispersive X-ray spectroscopy (EDS) and X-ray photoelectron spectroscopy (XPS). The XRD patterns of the ZnO:Ag nanoparticles consist of distinct peaks corresponding to the hexagonal wurtzite type (space group P63mc) crystal structure of ZnO along with the typical peaks of face centered cubic crystal structure of metallic silver. EDS and XPS analyses confirmed the chemical composition and surface structure of the core-shell nanoparticles. Microstructural analysis revealed the monodispersed platelet shaped ZnO nanoparticles with a thin layer of Ag coating on the surface. UV–visible diffuse reflectance studies revealed the effects of Ag coating on the optical properties of the samples. Detail analysis of the dielectric properties of the samples were performed as a function of frequency (1 Hz to 10 MHz) and temperature (300–528 K) to investigate the electrical conduction mechanism in the samples.