Dielectric constants determine the level of miniaturization in capacitive components involved in electronic devices. Cu‐Li co‐doping is attempted to introduce the multiferroic relaxor nature of dielectricity and dilute magnetism in the bulk material simultaneously as Li+ ion substitution in ZnO lattice is known to form acceptor states within the band gap of ZnO and paramagnetic Cu2+ present in ZnO lattice can introduce dilute magnetism. Phase purity and substitution of Cu2+ and Li+ ions in ZnO lattice along with oxide‐ion vacancy formation was confirmed using Powder x‐ray diffraction (XRD), Scanning Electron Microscope (SEM), and Energy Dispersive X‐ray analysis (EDX), X‐ray Photoelectron Spectroscopy (XPS), Inductively Coupled Plasma Mass Spectrometry (ICP‐MS) and Magnetic property measurement system (MPMS) studies. The dielectric constant (ϵr′) of bulk pristine Zn0.92Cu0.05Li0.03O and Zn0.9Cu0.05Li0.05O is found to be 18000 and 20000 respectively at 1000 Hz frequency at 600 °C. Both dielectric constant and dielectric loss were decreasing with increasing frequencies. The increase in dielectric constant (ϵr′) with increasing temperatures at different frequencies for Zn0.92Cu0.05Li0.03O1‐δ and Zn0.9Cu0.05Li0.05O1‐δ is likely due to the localized nature of hopping charge carriers in addition to interfacial polarization due to space charge. Tm was found to increase with increasing frequencies suggesting the relaxor nature of dielectricity in the Zn0.9Cu0.05Li0.05O1‐δ. Bulk pristine Zn0.9Cu0.05Li0.05O1‐δ also exhibits ferroelectricity at room temperature with remnant polarization Pr and Vc equal to 4.20e–02 μC/cm2 and 4.1e+03 V/cm at (30KV, 500 Hz) respectively. Zn0.9Cu0.05Li0.05O also shows the paramagnetic behaviour.