A composite of polyaniline (PANI) encapsulating titanium oxide (TiO2) with nanometer size has been synthesized by in-situ emulsion polymerization. Particle dimensions have been measured and the nature of the association between the components have been observed using SEM and TEM techniques. The interaction between PANI and TiO2 and the nature of chain growth have been investigated and explained according to the results of FTIR. The improvement of thermal stability and crystallinity of nanocomposites have been evaluated by using TGA and XRD. The mechanism of charge transport in these composites has also been studied by measuring the DC conductivity of all samples and the temperature-conductivity relation. The photoconductivity of PANI-TiO2 composite has been enhanced markedly. This effect is discussed by taking the photoinduced charge transfer between PANI and TiO2 into consideration.