The　lead-free　0.5(Ba0.7Ca0.3)TiO　-0.5Ba(Ti0.8Zr0.2)O-3　(BCTZ)　ceramics　with　Er　doping　have　shown　good　upconversion　photoluminescence　(PL)　and　desirable　optical　temperature　sensing　properties.　To　bridge　a　relationship　between　the　structure/intrinsic　defects　and　properties　of　rare-earth-doped　ferroelectrics,　we　designed　and　fabricated　a　series　of　BCTZ　ceramics　doped　with　1　mol　%　Er3+　by　combining　the　first-principles　calculations　and　experimental　measurements.　Theoretically,　we　discovered　that　Er　can　occupy　both　A　sites　(i.e.,　replacing　Ba　or　Ca)　and　B　sites　(i.e.,　replacing　Ti　or　Zr)　in　the　BCTZ　lattice　and　highlighted　that　the　Erdoping-induced　vacancy　concentration　decreases　for　both　the　oxygen　vacancies　(V-o)　and　cation　vacancies　(VD.　Experimentally,　the　enhanced　PL　performance　and　the　dielectric,　ferroelectric,　and　piezoelectric　properties　of　the　Er-doped　BCTZ　ceramics　have　been　observed.　Finally,　the　physical　origin　of　Er-induced　property　enhancement　in　BCTZ　has　been　elaborated　according　to　the　charge　density　and　chemical　bonding　analysis.　These　results　open　up　a　path　to　investigate　the　effects　of　site　substitution　and　vacancies　on　optoelectronic　properties　of　multifunctional　rare-earth-doped　ferroelectrics.