Temperature-dependent X-ray absorption near-edge structures, X-ray linear dichroism (XLD) and extended X-ray absorption fine structure (EXAFS) spectroscopic techniques were used to investigate the valence state, preferred orbital and local atomic structure that significantly affect the electrical and magnetic properties of a single crystal of YBaCuFeO5 (YBCFO). An onset of increase of resistivity at ~180 K, followed by a rapid increase at/below 125 K, is observed. An antiferromagnetic (AFM)-like transition is close to the temperature at which the resistivity starts to increase in the ab-plane and is also observed with strong anisotropy between the ab-plane and the c-axis. The XLD spectra at the Fe L3,2-edge revealed a change in Fe 3d eg holes from the preferential {bf{3}}{{boldsymbol{d}}}_{{{bf{x}}}^{{bf{2}}}{boldsymbol{-}}{{bf{y}}}^{{bf{2}}}} orbital at high temperature (300–150 K) to the {bf{3}}{{boldsymbol{d}}}_{{{bf{3}}{bf{z}}}^{{bf{2}}}{boldsymbol{-}}{{bf{r}}}^{{bf{2}}}} orbital at/below 125 K. The analysis of the Fe K-edge EXAFS data of YBCFO further revealed an unusual increase in the Debye-Waller factor of the nearest-neighbor Fe-O bond length at/below 125 K, suggesting phonon-softening behavior, resulting in the breaking of lattice symmetry, particularly in the ab-plane of Fe-related square pyramids. These findings demonstrate a close correlation between electrical resistivity and coupling of the preferred Fe 3d orbital with lattice distortion of a single crystal of YBCFO.