In this work we demonstrate the use of nanocomposite thin films of poly(vinyl alcohol) with embedded silver NPs for chemosensing purposes. Silver NPs are in situ synthesized inside polyvinyl alcohol during the bake step of the formation of a nanocomposite thin film. The polymer in the nanocomposite provides an appropriate chemical and electromagnetic environment for metal NPs in order to interact with and hence detect the chemical species. A limit of detection below 20 nM is found when detecting 2-mercaptoethanol as the analyte, when measuring spectral changes (peak wavelength, linewidth and intensity) in the Localized Surface Plasmon Resonance. Potential qualitative and semi-quantitative sensors based on such nanocomposites would be easy-to-prepare, easy-to-use and low-cost, which are the basis of a fully disposable sensing platform technology.