Polymers play an important role in electrical insulating and field grading technology because of their high electrical strength, ease of fabrication, low cost and simple maintenance. Conventionally, additives have been mixed into polymer matrices to improve their resistance to degradation, to modify mechanical and thermomechanical properties, and to improve electrical properties such as high-field stability. However, concentional additives have a negative effect on electrical properties. This invention provides polymer nanocomposites with improved resistivity, permittivity, dielectric properties, mechanical properties, and electrical breakdown strength for use as field grading materials or as insulating materials. In this invention, semiconducting or dielectric nanoparticles are heterogeneously distributed within a polymeric matrix. The electrical resistivity of the polymer nanocomposites can be tailored by controlling the size of the particles and their distribution within the matrix. Inorganic nanoparticle surfaces may be treated with coupling agents such as organosilane or organotitanate to improve their bonding to the organic resins.