A ternary composite comprising of p-toluene sulfonic acid doped polyaniline (PANI), chitosan and reduced graphene oxide (RGO) with stable aqueous dispersibility has been synthesised via oxidative polymerisation of aniline in chitosan/RGO dispersion. For comparison; PANI, PANI/chitosan and PANI/RGO composites were also synthesised using the same procedure. FTIR, Raman, XPS, XRD and UV-VIS confirmed the successful synthesis of the PANI and the composites. The aqueous dispersions of the PANI/chitosan and the ternary composites were found to be stable even after more than four months. The stability of the dispersion was attributed to the polycationic nature of the chitosan. The thermogravimetric analysis (TGA) shows an improved thermal stability for the ternary composite compared to PANI, PANI/chitosan and PANI/RGO composites up to about 160 °C. In addition, the electrical conductivity of the ternary composite is around 33 and 2.6 times greater than that of PANI/chitosan composite and PANI, respectively. Interestingly, the analysis of the band gap shows the lowest value of optical band gap of 2.25 eV for the ternary composite compared to PANI, PANI/chitosan and PANI/RGO with 2.50 eV, 2.60 eV and 2.44 eV, respectively. The reduced band gap for the ternary composite might be attributed to the formation of conductive networks throughout the chitosan matrix due to uniform dispersion of RGO in the chitosan matrices as well as the possible grafting of PANI onto chitosan backbone. These observed properties indicate the potential utilisation of the ternary composite in optical, electrical, optoelectronic and many other industrial applications. © 2019 The Authors