The present research paper reports the extractive potentiometric sensing of lead ions over a chemically functionalized ternary nanocomposite of nickel oxide intercalated chitosan grafted polyaniline (NiO-in-CHIT-g-PANI) prepared by the in situ chemical polymerization and composite formation technique under optimized conditions. The structural, morphological, and physical properties of the composite material were investigated by Fourier transform infrared (FT-IR) spectroscopy, X-ray diffraction (XRD), scanning electron microscopy (SEM), and other suitable ASTM methods. The obtained analytical result suggests the formation of a porous hybrid composite matrix with better electrical conductivity ∼ 5.25 × 10-3 S cm-1, free interactive carbonyl sites, and evolved aligned crystallinity. Furthermore, a film of the synthesized composite was cast on ITO coated glass by the spin coating technique for potentiometric sensing and the recovery of adsorbed Pb2+ ions from natural and artificial water solutions. Under optimum conditions of ∼pH = 7.0 and a temperature of 25 °C, the electrode exhibited potential responses for Pb2+ ions in concentrations ranging from 1.0 × 10-6 M to 1 × 10-3 M along with a sensitivity of 0.2379 mV μM-1 cm-2, response time of 40 s, recovery time of 10 s, and stability for 64 days. The adsorbed Pb2+ ions were recovered at a rate of 84% after applying an optimized reverse voltage on the above-used electrodes. The adsorption and desorption mechanism has been explained based on the induced potential due to the electrochemical surface interaction between Pb2+ and the NiO-in-CHIT-g-PANI based electrode. The analytical application of the fabricated electrode in the real sample was also explored for the sensing and recovery of the respective metal ions in wastewater samples along with the possibility of optimization of the required metal concentrations.