This research article delves into the synthesis and characterization of Li(1‐x)Sm(x/3)NbO3 ceramic, employing a high‐energy ball milling process. The investigation explores the incorporation of Sm3+ at the Li+1 site across a range of compositions (x = 0, 0.01, 0.02, 0.03, 0.04, 0.05). Structural analysis, using x‐ray diffraction (XRD) and Rietveld structural refinement, establishes that within the investigated composition range, no significant changes in the crystal structure are evident. The x‐ray photoelectron spectroscopy revealed the presence of oxygen vacancies as well as the stable oxidation state of different elements like O2−, Nb5+, Sm3+, and Li1+. At sintering temperature 1050°C, the average grain sizes vary approximately from 1.5 to 3.8 μm for different compositions with regular grain morphology. The UV‐Vis analysis reveals a noteworthy reduction in the band gap to 3.09 eV for the x = 0.01 composition. Photoluminescence studies exhibit distinct green, orange, and red bands, with the highest intensity observed for x = 0.01, showcasing promising optical properties. The dielectric permittivity of Sm‐substituted compositions surpasses the response of pure LiNbO3, demonstrating an increasing trend with temperature in the frequency range 100 Hz‐1 MHz intriguingly, no Curie temperature is observed up to 500°C for any composition. The polarization vs electric field hysteresis loop response highlights better polarization characteristics at the room temperature and maximum polarization is 0.66 μC/cm2 for the composition x = 0.05. The energy storage response of the developed compositions is investigated, which reveals a maximum efficiency of 46.64% for x = 0.04 in Li(1‐x)Sm(x/3)NbO3. The tunable optical properties, enhanced dielectric response, and notable energy efficiency of these high TC ceramics suggest their utility across diverse applications. These findings not only contribute to the understanding of functional ceramic materials but also pave the way for their optimized utilization in advanced technological applications, particularly in energy storage devices under nonambient conditions at high temperatures.