The integration of ferromagnetism in lead-free ferroelectric materials is important to fabricate smart materials for electronic devices. In this work, (1 − x)Bi0.5Na0.5TiO3 + xMgFeO3-δ materials (x = 0–9 mol%) were prepared through sol–gel method. X-ray diffraction characterization indicated that MgFeO3-δ materials existed as a well solid solution in lead-free ferroelectric Bi0.5Na0.5TiO3 materials. The rhombohedral structure of Bi0.5Na0.5TiO3 materials was distorted due to the random distribution of Mg and Fe cations into the host lattice. The reduced optical band gap and the induced room-temperature ferromagnetism were due to the spin splitting of transition metal substitution at the B-site of perovskite Bi0.5Na0.5TiO3 and the modification by A-site co-substitution. This work elucidates the role of secondary phase as solid solution in Bi0.5Na0.5TiO3 material for development of lead-free multiferroelectric materials.