Dielectric relaxation behavior of multiwalled carbon nanotube reinforced butyl rubber composites has been studied as a function of variation in filler in the frequency range of 20-2 x 106 Hz. The effect of variation in filler loadings on the complex and real parts of impedance was distinctly visible, which has been explained on the basis of interfacial polarization of fillers in a heterogeneous medium and relaxation dynamics of polymer chains in the vicinity of fillers. The electric modulus formalism has been used to further investigate the conductivity and relaxation phenomenon. The frequency dependence of AC conductivity has been investigated by using Percolation theory. The phenomenon of percolation in the composites has been discussed based on the measured changes in electric conductivity and morphology of composites at different concentrations of the filler. The percolation threshold as studied by AC conductivity occurred in the vicinity of 6-8 phr of filler loading. Scanning electron microscope microphotographs showed agglomeration of the filler above this concentration and formation of a continuous network structure. (C) 2009 Wiley Periodicals, Inc. J Appl Polym Sci 113:1690-1700, 2009