Abstract The difference in doping behaviors of intermediate rare-earth ions and their effects on the dielectric property and microstructure of BaTiO 3(BT)–MgO–Re 2O 3 (Re = Dy, Ho, Y) system were investigated. Compared to Y and Ho, Dy ions provided BT ceramics with a high rate of densification and much enhanced shell formation due to their high solubility in BT. However, the microstructure of the Dy doped specimen was unstable at high temperatures in terms of grain growth. Until the specimen was densified, the tetragonality of Dy doped specimen was remarkably decreased and the substitution amount of Dy ions for A-site was larger than that of Y and Ho ions. After complete densification, the tetragonality was increased again and the B-site incorporation of Dy ions was increased far more than that of Y and Ho ions resulting in grain growth. This different behavior was considered to result in temperature coefficient of capacitance curves in the Dy doped specimen different from that of typical core–shell grains.