Results on the effect of water absorption on the mechanical and dielectric properties of nano-size spherical alumina (Al2O3) filled epoxy are presented in this paper. The results from tensile tests indicate that incorporation of the Al2O3 nanoparticles into the epoxy can improve the stiffness of the matrix. DMA results show that the stiffness improvement is more pronounced at the rubbery region of the matrix. The alumina nanoparticles can increase the dielectric constant of the epoxy resin due to the increase in the total interfacial area. Upon water absorption, the mechanical properties of the alumina/epoxy nanocomposites decrease evidently, because of the damages induced by water on the epoxy resin. However, the ductility of epoxy can be improved by the water absorption process. In addition, the dielectric constant of the alumina/epoxy nanocomposites increased greatly after water absorption treatment.