A new three-phase PZT/ C/ PVC composite comprising PZT (50vol%), nanocrystalline PVC (50 vol% ) and a small volume fraction f of carbon black (C) was prepared by the hot-pressing technique. The dielectric property of the composite as a function of the frequency and the dielectric and piezoelectric properties as a function of the volume fraction f of C were studied. The measured dielectric property demonstrates that a percolation transition occurs in the three-phase composites as in normal two-phase metal-insulator continuum media. The dielectric constant varies slightly with f at f ＜ 0.1 and increases rapidly when f is close to the percolation threshold at 1 kHz. The optimum properties were obtained for f = 0.5 before the percolation threshold in the PZT/ C/ PVC (50/f/(50 - f) vol% ) composite with its d33 (20 pC/N) being 50% higher than that of the PZT/ PVC (50/50vol% ), and its g33(47.23 × 10-3 Vm/N) and Kp (0.25) much higher than the earlier reported values.XRD patts and P-E hysteresis loops were used to interpret the experimental results.