Polyaniline-yttrium trioxide (PAni-$Y_2O_3$) composites were synthesized by the in-situ polymerization of aniline in the presence of $Y_2O_3$ The composite formation and structural changes in these composites were investigated by X-ray diffraction (XRD), Fourier transform infra red spectroscopy (FTIR), scanning electron microscopy (SEM) and high resolution transmission electron microscopy (HRTEM). The direct current (DC) electrical conductivity of the order of $0.51{ imes}10^{-2};S;cm^{-1}-0.283;S;cm^{-1}$ in the temperature range 300 K-473 K indicates semiconducting behavior of the composites. Room temperature AC conductivity and dielectric response of the composites were studied in the frequency range of 10 Hz to 1 MHz. The variation of AC conductivity with frequency obeyed the power law, which decreased with increasing weight percentage (wt %) of $Y_2O_3$. Studies on dielectric properties shows the relaxation contribution coupled by electrode polarization effect. The dielectric constant and dielectric loss in these composites depend on the content of $Y_2O_3$ with a percolation threshold at 20 wt % of $Y_2O_3$ in PAni. Electromagnetic interference shielding effectiveness (EMI SE) of the composites in the frequency range 100 Hz to 2 GHz was in the practically useful range of -12.2 dB to -17.2 dB. The observed electrical and shielding properties were attributed to the interaction of $Y_2O_3$ particles with the PAni molecular chains.