Polycrystalline solid solutions of (1-x)PbTiO3-(x)Bi(Zn0.5Zr0.5)O3[x = 0.10, 0.20, 0.30] have been synthesized by using solid state reaction method and followed by air annealing (AA)/ vacuum annealing (VA). All the samples show single phase perovskite structure with tetragonal symmetry (P4mm). Structural parameters are calculated using the Rietveld refinement technique. With the help of Scanning Electron Microscope (SEM), the surface morphology of all the samples is recorded at room temperature. The influence of VA on dielectric parameters such as dielectric constant and tangent loss of the synthesized samples are studied and compared with that of AA samples. These results unfold superior dielectric properties of VA samples as compared to AA samples. Intriguingly, the VA samples exhibit exotic ferromagnetism in non-magnetic PbTiO3–Bi(Zn0.5Zr0.5)O3 samples, transforming these into room temperature magneto-electric multiferroics. Besides, both the ferroelectric and ferromagnetic order parameters were found to increase with the increase in Bi(Zn0.5Zr0.5)O3 doping in PbTiO3. The enhanced physical properties witnessed in VA PbTiO3–Bi(Zn0.5Zr0.5)O3 samples localized hopping of charge carriers confined to the grain.