Cadmium Oxide (CdO) nanoparticles have been synthesized by simple approach of sol-gel method at room temperature using cadmium acetate (precursor) and starch as stabilizing agent. The precipitate of cadmium hydroxide after hydrolysis by using ammonia was heated overnight and then sintered upto 600oC in steps so as to get the reddish brown colour of CdO nanoparticles. Nanocomposites of polyaniline with CdO nanoparticles have been synthesized by in-situ chemical oxidation polymerization method using ammonium persulphate (APS) as oxidant and HCl as dopant. The synthesized nanocomposites were subjected for spectroscopic and structural characterization using FTIR, UV-VIS and SEM, XRD respectively. The structure of CdO was found to be cubic with lattice parameter 4.689 Å which was confirmed from XRD. The average crystallite size was found to be 56 nm which was supported by SEM images. Structural changes have been observed with different weight % of CdO in composite in UV and IR spectra. Nanocomposites show high electrical conductivity compared to pure PANI. The conductivity of nanocomposites increases with increasing of CdO content because of the new conductivity passageways formed by embedded nanoparticles of CdO.