Dielectrics, Ferroelectric and Optical properties of Lithium Niobate has been examined using Potassium Oxide (K2O) as an additive on the samples prepared by solid state reaction method using high energy ball milling. The crystal structure analysis by Rietveld structure refinement confirms that the LiNbO3 (LN) with K2O additive also exhibit the rhombohedral structure with R3c space group. The SEM characterization of the microstructure reveals that the samples sintered at a temperature of 1050 °C, have regular and uniform grain morphology and better density. The average grain size decreases for the K2O added compositions in the beginning and increases later for higher concentration of additive. Thermal study with TGA suggests that as the activation energy is decreases, the polarization is enhanced and the LN composition with 2.72 wt% K2O additive shows the best thermal stability. The frequency and temperature dependent dielectric properties were investigated in a wide range of frequency and a substantial enhancement in the dielectric constant of LN is obtained by K2O addition. A useful enhancement in permittivity is obtained with increase of temperature. The band gap values for direct and indirect band gaps for the various compositions are also determined. The least direct band gap is discovered to be 2.36 eV for the composition with 2.72 wt% K2O additive. The composition-dependent photoluminescence (PL) emission studies reveal that the emission spectra for both the pure LiNbO3 and K2O added LiNbO3 compositions lies in the UV–visible region. All the investigated compositions exhibit distinct green, yellow, and red emission peaks. The LN with 2.72 wt% K2O additive shows the best dielectric, thermal stability and polarization response with maximum polarization Ps ∼1.16 μC/cm2. The present investigations suggest that properties of LN can be significantly improved by using K2O additive for sustainable, low cost, environmental friendly energy storage material for high temperature applications.