Grafting novel and nature-inspired phenolic esters onto cellulose nanocrystals (CNCs) provides nanofibers with excellent protection against UV radiation when incorporated into a polymer matrix. In this work, CNCs decorated with a novel UV-absorbing phenolic diester (CNC-diethyl ferulate or CNC-DEF) obtained via a click-type copper-catalyzed azide/alkyne cycloaddition reaction were incorporated into a polyvinyl alcohol (PVA) matrix to produce transparent films with excellent photostability and UV-absorbing properties. PVA films filled with 20 wt % CNC-DEF exhibited complete UV protection (0% transmittance) and high transparency in the visible region (70–90% transmittance). In contrast, PVA films loaded with the pristine CNCs do not show any UV-shielding properties. Importantly, the grafting of DEF moieties on CNCs significantly aids the dispersion of the phenolic diester in the aqueous PVA matrix, which was not achieved with DEF blended with PVA. Mechanical tests also show that the addition of 20 wt % CNC-DEF in PVA increases the tensile strength and modulus by 91 and 150%, respectively, relative to neat PVA. The oxygen barrier properties of the composite film also improve with CNC-DEF addition. This study shows the great potential of the phenolic-ester-decorated CNCs as dispersible, multifunctional UV-absorbing nanoreinforcements in PVA films for industrial and packaging applications.