Room‐temperature (RT) multiferroic materials have received significant research attention for various potential applications; however, their properties are not suitable for real‐world implementation. In this study, a nano‐scale localized flexoelectric effect is introduced to enhance the RT multiferroic performance of epitaxial bismuth iron oxide (BiFeO3; BFO) thin films by embedding 10 mol% Ba(Cu1/3Nb2/3)O3 (BCN) nano‐clusters into the host BFO film, which originally has a rhombohedral crystal structure. By utilizing nano‐clustering, a large out‐of‐plane coherent strain is localized around the nano‐clusters, resulting in a highly strained tetragonality of the BFO structure; subsequently, the films exhibit peculiar types of domains and domain walls, such as nano‐scale rotational vortices and antiparallel dipole configurations. These peculiar domain structures, which originate from the localized flexoelectric effect at the nano‐scale, enable excellent ferroelectric, ferromagnetic, and RT multiferroic magnetoelectric coupling. This study reveals that the local variation in the localized flexoelectric field around nano‐clusters considerably impacts the formation of unusual domain‐wall structures. This suggests that the controlled introduction of nano‐clusters with different crystal structures is promising for achieving the desired multiferroic properties.