SummaryWireless sensor networks (WSNs) require precise node location in order to function properly, and they are essential in many different applications. In this research, we propose a unique method to maximize the accurate estimate of average localization errors (ALEs) in WSNs by utilizing federated learning (FL) approaches. The suggested approach combines the extraction of spatial features with collection of contextual data through integration of hybrid convolutional neural network–bidirectional encoder representations from transformers (CNN‐BERT) model. Effectively applying min–max normalization to input features minimizes data from flowing into test, validation, and training sets. The technique is centered around a collaborative learning architecture, wherein the weights of the model are iteratively assessed and modified on centralized server. The suggested methodology's effectiveness in an array of settings is illustrated by mean absolute error (MAE), mean squared error (MSE), and root mean square error (RMSE) values for node localization in WSN. Network B demonstrated accuracy with an MAE of 0.05, MSE of 0.03, and RMSE of 0.10; Network C demonstrated strong accuracy with an MAE of 0.09, MSE of 0.08, and RMSE of 0.12; and Network A generated an MAE of 0.04, MSE of 0.06, and RMSE of 0.08. Furthermore, the centralized server, which is crucial for collaborative learning, obtained exceptional MAE of 0.01, MSE of 0.02, and RMSE of 0.99 demonstrating the superiority of the FL‐optimized method in improving localization accuracy. The outcomes demonstrate the FL‐optimized hybrid model's superiority over conventional methods in providing accurate node localization in a variety of WSN settings.