In this work, we investigate the effect of lithium and aluminium co-doping (0, 0.1, 0.2, and 0.3 mol%) on the phase formation, microstructure, dielectric, and electrical properties of (Ba0.85Ca0.15) (Ti0.90Zr0.10)O3 ceramics prepared by solid state reaction method. Rietveld refinement of X-ray diffraction patterns reveals the coexistence between the orthorhombic (Amm2) and tetragonal (P4mm) phases in all samples, and the amount of tetragonal phase increased with increasing Li and Al content. All ceramics reveal dense microstructures having relative density ~ 94–98% and the average grain size is significantly reduced by increasing Li–Al content from 0.1 to 0.3%. The temperature dependence of dielectric constants at different frequencies exhibited diffuse phase transition behaviour with no frequency dispersion. The refined grains and high density of BCLAxTZ ceramics leads to an improvement of dielectric properties, the composition BCLA0.3TZ exhibits excellent dielectric properties [ε = 7712.98, tan(δ) = 1.49 at.% 1 kHz]. The conduction mechanism have been investigated by means of impedance spectroscopy at various temperatures (100–450 °C) and the values of resistance, and conductivity, associated with the grain and grain boundaries were evaluated. When increasing the Li–Al content, an increase of dc conductivity was observed throughout the whole explored temperature rang. The appearance of two semicircles in Nyquist plots suggests the contribution of both grain as well as grain boundary contribution to overall electrical behavior in all samples. The grains effect is gradually replaced by grain boundaries effect with increasing temperature. The frequency dependence of ac conductivity was wellfitted according to Jonscher’s power law.