Silica coated Silver nanoparticles of different shell thickness dispersed in the polymer PVA were synthesized by a simple solution casting route for studying the effect of shell-thickness on the thermal, mechanical, dielectric and electrical properties of the resulting composites. In order to control the thickness of the Silica shell a slightly modified Stober method was adopted. The nanoparticles and the composites were characterized by XRD, FTIR, TEM, SEM, TGA, DSC and Impedance analyser to investigate the results. The TEM images revealed the average radius of the Ag nanoparticles at the cores to be 56 nm and the Silica shell thickness to be in the range of 31nm to 79nm. The FTIR study confirmed the coating of SiO2 shell over the Silver core by identifying the characteristic chemical bonds. Results from various measurements confirmed that the thickness of the shell plays a key role in influencing different properties of the polymer composites. The dielectric constant of the composite was found to be maximum for the composite with minimum shell thickness and the data of dielectric constant versus thickness from experiments were compared with the data of a theoretical model. The as prepared composite with least thickness can be used as capacitors in energy storage devices.