Briefly, 0.005-mol Sm3+-doped (Ba0.85Ca0.15)(Ti0.9Hf0.1)O3 ([(Ba0.85Ca0.15)0.995Sm0.005](Ti0.9Hf0.1)O3, BCTH:0.005Sm3+) lead-free ceramics were prepared via hydrothermal method and powder injection molding using paraffin and oleic acid as binders, and the effects of preparation method and sintering conditions on microstructure, dielectric behavior and optical properties were investigated. XRD Rietveld refinement reveals the coexistence of orthogonal, rhombohedral and tetragonal phases, in which the crystal structure and phase fraction are influenced greatly by sintering temperature and holding time. The ceramics present enhanced relaxor behavior and frequency dispersion phenomenon as compared with those prepared by the solid-state sintering method, and the diffusive index γ value is within 1.421–1.673. The transition mechanism and luminescence performance of BCTH:0.005 Sm3+ were analyzed by Blasse formula, photoluminescence spectrum and fluorescence lifetimes, where emission peaks show slight blueshift, fluorescence decay lifetime becomes shorter, electric multipole interaction dominates the energy transfer mechanism, and the down-conversion luminescence is one-photon absorption process. The CIE chromaticity color coordinate (0.4746, 0.5048), correlated color temperature 3134 K and color purity 93.58% are achieved, which reveals that the BCTH:0.005 Sm3+ ceramics express high quality yellow emission rather than orange-red light of the hydrothermal method synthesized nano-powder, and have potential application in optical field.