Crystalline ceria (CeO2) nanoparticles have been successfully synthesized by a microwave-assisted solution method. Polyaniline (PANI)/cerium dioxide (CeO2) nanocomposite was synthesized by in situ polymerization of aniline in the presence of CeO2 nanoparticles. Characterization of CeO2 and PANI/CeO2 nanomaterials are carried out using various studies such as powder X-ray diffraction, infrared spectral and UV-Vis absorption spectral analyses, scanning electron microscopic and high-resolution transmission electron microscopic (HRTEM) studies and thermal analysis. The HRTEM of the images indicate that the CeO2 nanoparticles were embedded in the PANI matrix forming the core-shell structure.