Single‐phase multiferroic Ba(Fe0.67Ce0.33)0.01Ti0.99O3 (BFTO:Ce) and Ba(Fe0.67La0.33)0.01Ti0.99O3 (BFTO:La) nanostructures were synthesized by a hydrothermal method (180°C/48 h). Rietveld refinement of X‐ray diffraction could confirm crystalline phase and lattice deformation by Ce, La into BFTO. The Ce and La doping induce nanoaggregation‐type BFTO nanostructural product due to their ionic size effect and chemical behavior with OH− ions. Raman active modes show tetragonal phase and defects due to vacancies in the BFTO lattice. Photoluminescence spectrum involves multiple visible emissions due to defects/vacancies. The observed ferroelectric polarization is enhanced due to shape/size effect of nanoparticles, lattice distortion, and filling of d orbital in the perovskite BaTiO3. The room‐temperature magnetic behavior is described due to antiferromagnetic interactions that strengthen by Ce and La doping. The zero‐field cooling and field cooling magnetic measurement at 500 Oe indicates antiferromagnetic to ferromagnetic transition. Dynamic magnetoelectric coupling was investigated, and maximum longitudinal magnetoelectric coefficient is 62.65 and 49.79 mV/cmOe, respectively, measured for BFTO:Ce and BFTO:La. The magnetocapacitance measurements induce negative values that described in terms of magnetoresistance and magnetic phase transition effects. The influence of oxygen vacancy on multiferroicity is evaluated by valance states of O ions.