Dielectric permittivity and loss of percolative composites of cobalt nanoparticle loaded polyvinylidene fluoride (PVDF) have been investigated. The films have been characterized by X-ray diffraction, infrared spectroscopy, dielectric relaxation spectroscopy and electrical polarization measurements. A remarkable increase in the amount of polar β phase of PVDF has been observed upon dispersion of cobalt nanoparticles in the PVDF matrix. The dielectric constant of the composite increases significantly near the percolation threshold (19 vol%) of filler cobalt nanoparticles in the PVDF matrix. The results have been explained by the space charge polarization at the interfaces between the two phases of the composite and the development of several micro capacitor structures. The electrical field dependent polarization also increases upon addition of cobalt nanoparticles. This could be due to formation of a higher amount of the β phase of PVDF.