This work demonstrates the critical role of orbital hybridizations in the FeO6 octahedral distortion, composition‐driven phase transition, and bonding covalency in multiferroic (Bi1−xSmx)FeO3 (x = 0.10‐0.20) ceramics in the vicinity of the morphotropic phase boundary (MPB). Sequential composition‐driven transitions from the polar rhombohedral R3c to antipolar orthorhombic Pbam and then Pnma phases were revealed as the system crosses the MPB with increasing Sm. A coexistence of ferroelectric (FE) rhombohedral R3c and antiferroelectric (AFE) PbZrO3‐like orthorhombic Pbam symmetries was identified by the 1/2{000}, 1/4{100}, 1/4{110}, 1/4{111}, and 1/4{121} superlattice diffractions at x = 0.12‐0.16. In addition to R3c and Pbam space groups, the nonpolar SmFeO3‐like orthorhombic Pnma space group becomes the predominant phase at x = 0.20 confirmed by the 1/2{100} superlattice diffractions. The Fe L3‐edge and oxygen K‐edge synchrotron X‐ray absorptions indicate that the O 2p–Fe 3d and O 2p–Bi 6s/6p orbital hybridizations were decreased as the system approaches the MPB.