Among the various multiferroic materials bismuth iron oxide is a promising candidate due to its relatively high antiferromagnetic Neel temperature and high ferroelectric Curie temperature as compared to all other multiferroic materials. However, synthesis of phase pure BiFeO3 is extremely difficult due to the volatile nature of Bi2O3 that leads to bismuth-deficient phases and if excess of bismuth is employed it gives rise to bismuth rich phases. Moreover, the synthesis of phase pure BiFeO3 requires high temperature annealing in the range of 400–700 °C. In order to overcome these difficulties, we here report microwave-assisted sol–gel synthesis of phase pure BiFeO3 nanoparticles. In the present study, power of microwaves is varied as 136, 264, 440, 616 and 800 W. XRD results show formation of phase pure BiFeO3 with rhombohedrally distorted perovskite structure at 264, 440 and 800 W. Crystallite size decreases to 21 nm with the increase in microwave power to 800 W. The presence of absorption bands at 470 and 580 cm−1 in FTIR spectra, corresponding to FeO6 and BiO6, indicate the formation of pure BiFeO3 phase. BiFeO3 nanoparticles show high dielectric constant (135 at 1 kHz) at 264 W. SEM images show the formation of spherical and cubic nanoparticles in the range of 100–150 nm with microwave powers of 136–440 W. Increasing the microwave power to 616 W gives spherical nanoparticles with sizes of 60 nm while further increasing the microwave power to 800 W results in nanoneedles with diameter of 30 nm. Ferromagnetic behavior, instead of antiferromagnetic nature of BiFeO3, is observed for the nanoparticles prepared at microwave power of 616 and 800 W. This demonstrates that microwave-assisted sol–gel technique gives phase pure BiFeO3 nanoparticles using low power and less time, along with excellent ferromagnetic and dielectric properties as compared to conventional heating method.