Revealing clearly the control of microstructure on dielectric and magnetic properties of multiferroic composite is of great importance in designing the composite with high performance. In this paper, the BTO/NZFO composite thin films with solid solution constituent phases around 20 nm were prepared by RF magnetron sputtering. The lattice constant, grain size, intrinsic and extrinsic oxygen vacancies and non-stoichiometric defect in the nanocomposite thin film are measured by XRD, TEM and XPS. The conductivity, dielectric properties and magnetic performances of the nanocomposite are measured by impedance analyzer and MPMS respectively.In this multisusceptible nanocomposite thin film, the permittivity is compatible with Kirkpatrick model, and the dielectric loss is controlled importantly by the high fraction of grain boundary which restrains the charge migration and makes thus the loss low significantly. The saturation magnetization of the nanocomposite thin film is influenced mainly by the lattice deformation of nanosized constituent phases. The magnetic threshold of the nanocomposite shifts low from the real topological one, which is profitable for the composite to contribute simultaneously the low dielectric loss and high permeability. The coercivity, which is controlled by the grain size of NZFO and magnetic communication among NZFO nanoparticles, displays a novel percolation behavior.increasing ferrite content when x < 0.6 and keeps stable when x > 0.6; and the lattice constant of the NZFO phase decreases slowly with increasing ferrite when x < 0.4 and speedily when x > 0.4 in the (1−x)BTO/xNZFO composite. Fig. 3(c) exhibits the grain sizes of the BTO and NZFO phases in the composite thin film which are calculated from the X-ray diffraction peak by Scherer's equation.The grain size of the NZFO phase increases linearly from 14.3 nm to 20.0 nm while that of the BTO