Extensive studies have already been reported on the optical characteristics of ZnO/polymer nanocomposite films, using a variety of polymers including transparent polymers such as polystyrene, polymethyl methacrylate etc and many interesting results have been established regarding the non linear optical characteristics of these systems. Poly (vinyl alcohol)(PVA) is a water soluble polymer. Though the structural and optical studies of ZnO/PVA nanocomposite films have already been investigated, there are no detailed reports on the nonlinear optical characteristics of ZnO/PVA nanocomposite films, irrespective of the fact that these nanocomposite films can be synthesized using quite easy and cost effective methods. The present work is an attempt to study in detail the nonlinear optical behaviour of ZnO/PVA nanocomposite films using Z-scan technique. Highly transparent ZnO/PVA nanocomposite films were prepared from the ZnO incorporated PVA solution in water using spin coating technique. The ZnO nanoparticles were synthesized by the simple chemical route at room temperature. High-resolution transmission electron microscopy studies show that the ZnO nanoparticles are of size around 10 nm. The ZnO/PVA nanocomposite films were structurally characterized by X-ray diffraction technique, from which the presence of both PVA and ZnO in the nanocomposite was established. The optical absorptive nonlinearity in the nanocomposite films was investigated using open aperture Z-scan technique. The results indicate optical limiting type nonlinearity in the films due to two photon absorption in ZnO with efficiency more than 50%. These films also show a self defocusing type negative nonlinear refraction in closed aperture Z-scan experiment. The present studies indicate that, highly transparent and homogeneous films of ZnO/PVA nanocomposite can be obtained on glass substrates using simple methods, in a highly cost effective way, since PVA is water soluble. These nanocomposite films offer prospects of application as efficient optical limiters to protect light sensitive devices from the possible damage on exposure to high intensity radiation.