The temperature, doping concentration, size, and magnetic field dependences of the real part of the dielectric function ϵ′ for Fe and Er ion‐doped BaTiO3bulk and nanoparticles—are calculated using microscopic models and the Green's function technique. The Fe ions substitute the Ti ions and cause a tensile strain. The maximum value of ϵ′ and the ferroelectric phase transition temperature TC decrease with increasing the Fe doping concentration. Moreover, ϵ′ decreases with decreasing particle size and increases with increasing an external magnetic field. The latter is an evidence for a strong magnetodielectric effect. By substituting the Ba with Er ions, there appears a strong compressive strain. It causes an increase in the maximum of ϵ′ and TC with increasing the Er ion concentration.