The present study reports synthesis of zirconia nanoparticles (Zr) via hydrothermal method where bio-extracts of Neem gum (NG) and Pongamia pinnata plant leaves (PP) are used as capping agents. For comparison purpose, the zirconia nanoparticles (CZr) are also synthesized by chemical route without using capping agents. Synthesized zirconia nanoparticles are characterized by XRD, FTIR, HR-TEM, EDX, and DLS. The purity of the final product is checked by the energy-dispersive X-ray spectroscopy (EDX) analysis. Interaction between surface hydroxyl groups of zirconia and functional groups of PP/NG are established by relocation of the peaks of respective functional groups in FTIR spectra. XRD studies show that the synthesized nanoparticles are of tetragonal phase. HR-TEM micrographs reveal uniform size with reduced agglomeration for PPZr and NGZr in respect to CZr. UV-Vis DRS spectra show a distinct absorption peak at approximately 225 nm, and band gaps of PPZr and NGZr are 4.96 eV and 4.75 eV, respectively. The nitrogen adsorption-desorption study confirms mesoporous nature of the material. The specific surface area of PPZr and NGZr are determined to be 80 m(2)/g and 100 m(2)/g, respectively. The zirconia nanoparticles show high dielectric constants in the lower frequency region. While, on the high-frequency side, the dielectric constant remains almost the same, owing to the space polarization effect.