Lead‐free (1−x)Ba0.85Ca0.15Ti0.90Zr0.10O3–xBi0.80Ba0.20FeO3 [(1−x)BCTZ–xBBF] ceramics, with BBF content (x) between 0 and 0.4, are prepared via the solid‐state combustion technique. The effect of BBF content on the phase formation, microstructure, and electric and magnetic properties of BCTZ is studied. From the Rietveld refinement analysis, the BCTZ ceramic shows coexisting orthorhombic and tetragonal phases, with a ratio of 35.4:64.6 and the percentage of the tetragonal phase continuously increases when x increases from 0.02 to 0.1, and becomes purely tetragonal at x ≥ 0.2. When x increases, the average grain size, density, and relative density continuously decrease while the unit cell volume enlarges. The dielectric constant at room temperature (εR) tends to decrease while the dielectric loss at room temperature (tan δR) increases with increased BBF content. For x = 0, a pure BCTZ ceramic, a well‐saturated P–E loop is observed with a polarization (Pr) and coercive field (Ec) of 8.94 μC cm−2 and 4.06 kV cm−1, respectively. The ferroelectricity drastically decreases with x = 0.02. For x ≥ 0.06, the leakage current increases, which suppresses the ferroelectricity. With no BBF content (x = 0), the ceramic has diamagnetic properties that change to paramagnetic properties with x = 0.02–0.06 and finally to ferromagnetic properties when the BBF increases between 0.10 and 0.40. For x = 0.10–0.40, the remnant magnetization (Mr) continuously increases.