In this work, nominal composition (1-x)BaTiO3-xBi(Zn0.5Y0.5)O2.75 [abbreviated as (1-x)BT-xBZY, (x = 0.05, 0.1, 0.15, 0.2, 0.25)] ceramics were prepared by solid-state reaction method, and sintered in reducing atmosphere. Effect of introducing BZY on the structure, dielectric and insulating properties of BT was investigated. XRD results demonstrated that the unit cell volume of (1-x)BT-xBZY ceramics expanded with the addition of BZY, accompanied with the transformation from tetragonal to pseudo-cubic phase when x ≥ 0.05. Electrical properties measurement showed that the dielectric-temperature stability and insulating properties of (1-x)BT-xBZY ceramics were effectively improved by BZY addition, where the optimum performances were achieved at x = 0.15, with the dielectric constant of 1362 and dielectric loss of 1.4%, and resistivity of 5.5 × 1012 Ω cm at room temperature, meeting the standard of X8R specification for MLCC application. The feasible mechanism of improved anti-reduction properties for (1-x)BT-xBZY ceramics was investigated by employing X-ray photoelectron spectra (XPS) and thermally stimulated depolarization current (TSDC) testing techniques, where the formation of defect dipoles [2YTiˈ-VO..] and the deoxidation of Bi ion were revealed and considered to be responsible for the anti-reduction behavior.