A study of the (1 − x)BaTiO3–xBiGdO3 system has been conducted for the first time. Gd can be incorporated into the BaTiO3 matrix up to x = 0.10, as demonstrated by the trend in the lattice parameters and EDS results. However, as suggested by Rietveld refinements, BSE images and EDS analysis, samples often contain inhomogeneities. Bi and Gd form a stable secondary phase that fills the space between grains; Purmorphamine of Bi into the BaTiO3 matrix can be slower than the other two processes and incomplete. This inhomogeneity is reflected in the dielectric response, with two maxima suggesting the presence of a residual core/shell structure where dopants are primary body confined to the outer grain regions, as observed directly in TEM. TC decreases with composition, until a ferroelectric-to-relaxor crossover occurs at x = 0.08, consistent with XRD patterns and Raman spectra. Co-doping with Bi and Gd thus first disrupts the long range ordering of ferroelectric BaTiO3 and finally leads to typical relaxor behaviour, with a high relative permittivity maximum slightly below room temperature.