(In0.5Nb0.5)0.005(Ti1‐xZrx)0.995O2 (INZT, x = 0‐0.10) ceramics were synthesized using a conventional sintering method, and the effects of Zr content on the microstructures, dielectric properties and electron‐pinned defect‐dipoles (EPDD) polarization of the resultant products were investigated. The solubility limit of INZT was x = 0.075, and a secondary ZrTiO4 phase appeared at x = 0.10. Ceramics with x = 0‐0.10 exhibited excellent dielectric properties, ie, colossal permittivity (CP, εʹ > 103) and low dielectric loss (tanδ < 0.1), over a wide range of frequencies (100‐106 Hz at 300 K) and temperatures (50‐350 K at 1 kHz). The dielectric spectra and XPS results confirmed that the CP property of the ceramics could be ascribed to their EPDD polarization. The activation energy (Ea) for EPDD polarization was continuously enhanced by increasing x values. EPDD relaxation parameters at different x values were revealed using Cole‐Cole equation fitting. Moreover, α, which characterize the relaxation time τ distribution, increased with x values, thus indicating that Zr was involved in and affected electron localized states. The high Ea, temperature Tp of the peak εʹʹ at 1 kHz, and dielectric relaxation time τp at 30 K were related to increases in hopping distance of electrons among defect clusters with Zr addition.