Inducing local structural heterogeneity is one of the most attractive strategies to enhance the piezoelectricity in lead-free piezoceramics, while the underlying mechanisms have not been well clarified, such as phase coexistence and domain boundary. Here, we mainly focus on analyzing the structure evolution mechanism of 0.96(K0.48Na0.52)(Nb1−xSbx)O3-0.04(Bi0.5Ag0.5)ZrO3 (0≤x≤0.1) (KNN) lead-free piezoelectric ceramics to study the intrinsic structural contributions from chemical modifying and/or alloy replacement. We explore the relation between structural characteristics and physical functionality by combining macro-spectral and micro-heterogeneity characterizations. It was found that Raman- and infrared-active phonon evolutions with respect to the motion of oxygen octahedron reveal the enhanced lattice symmetry when x increases to 0.06, along with the upswing optical electronic transitions. Moreover, we clarify the local heterogeneous structure of ceramics in terms of the spatial distribution of phonon traits on the micron scale accompanied with the atom-resolution polar vector state. The detected nanoscale atomic displacement clusters are directly related to the excellent polarization properties. Additionally, the phonon thermodynamics evolution was investigated in a wide temperature range of 80-720 K with unpolarized and polarized geometries. The detailed phase transition evolution and rhombohedral–orthorhombic–tetragonal multi-phase coexistence have been confirmed with Sb incorporation. The present work boosts the understanding of the compound-structure-functionality relation of KNN-based heterophase coexistent system, which could promote the development of the promising high-performance piezoelectric materials.