A modified sol-gel method was used to successfully produce Na1/2Y1/2Cu3Ti4O12 ceramics with high dielectric permittivity. The dielectric permittivity of Na1/2Y1/2Cu3Ti4O12 ceramics reaches values larger than 104 at room temperature and 1 kHz. Moreover, these ceramics exhibit two distinct thermally induced dielectric relaxations over a broad temperature range. The loss tangent is indeed small, ~0.032–0.035. At low temperatures, dielectric relaxation was attributed to the oxygen vacancy effect, while at high temperatures, it was attributed to grain boundary and sample-electrode contact effects. Our calculations revealed that Y and Na ions are likely to occupy Ca and Cu sites, respectively. As a result, other Cu related phases, especially CuO, were observed at the grain boundaries. Based on our analysis, there is a charge compensation between Na and Y ions in Na1/2Y1/2Cu3Ti4O12. Additionally, the Cu+ and Ti3+ states observed in our XPS study originate from the presence of an oxygen vacancy in the lattice. Last, the primary cause of the enormous dielectric permittivity of Na1/2Y1/2Cu3Ti4O12 ceramics primarily comes from the internal barrier layer capacitor effect.