The solid-state technique was utilized to prepare single-phase delafossite CuAlO2, along with 1, 2, 3, and 4% silver-doped CuAlO2 samples in this study. The contents of the samples were investigated using energy-dispersive X-ray spectroscopy (EDS) equipped with a field-emission scanning electron microscope (FE-SEM). The polycrystalline nature of all the analyzed cases was confirmed by structural analyses utilizing an X-ray diffraction (XRD) pattern with a simple typical peak of the CAO rhombohedral phase. The crystallite sizes increased with an increase in Ag concentration and were found to be in the range of 45–92 nm. Raman, FT-IR, and UV–Vis spectroscopy were used to study the structural and optical energy band gaps (Eg) of the Ag-doped CuAlO2 nanoparticles. The Kubelka–Munk function was used to calculate the optical bandgap of the ACAO alloys using diffuse reflectance spectra, and it was narrowed from 3.22 to 3.09 eV as the Ag ion concentration increased. AC impedance spectroscopy was used to investigate the dielectric characteristics of the Ag-doped CuAlO2 nanoparticles. The experimental findings elucidated that a small Ag substitution into CuAlO2 improves the optical parameters and dielectric properties.