The design of core-shell nanostructures is a potential approach to obtaining advanced dielectric nanocomposites. The frequency-dependent dielectric dispersion of gadolinium oxide (Gd2O3) encapsulated iron oxide (Fe2O3) core-shell nanoparticles (Fe2O3/Gd2O3 CSNPs) synthesized by the polyol route is investigated in the temperature range from 303 K to 553 K and in the frequency range from 42 Hz to 1.1 MHz. The phase formation of the materials is evaluated by X-ray diffraction analysis. Synthesized Fe2O3/Gd2O3 CSNPs have multi-core nature are found by Transmission electron microscopy (TEM). Relaxation time corresponding to dielectric loss is found to obey Arrhenius law with an activation energy of 0.26 eV. Dielectric relaxation is analyzed in the electric modulus formalism. The frequency-dependent conductivity spectra follow the Jonscher power law.