<p>Perovskite composite ceramics integrating distinct dielectric and optical functionalities play a crucial role in advancing multifunctional electronic and optoelectronic devices. In this study, we demonstrate that dual-phase (1-<i>x</i>)LaFeO₃-<i>x</i>BaFeO₃ composites synergistically exhibit colossal permittivity, tunable electrical conductivity, and adjustable bandgaps through interfacial engineering and defect modulation. Rietveld-refined X-ray diffraction patterns confirm the coexistence of phase-separated orthorhombic LaFeO₃ and hexagonal BaFeO₃ structures, while scanning electron microscopy reveals that the incorporation of BaFeO₃ promotes grain coarsening, with average grain size increasing from 2.32 to 4.72 μm. X-ray photoelectron spectroscopy analysis verifies the presence of mixed Fe²⁺/Fe³⁺/Fe⁴⁺ oxidation states and oxygen vacancies, which contribute to the observed colossal permittivity (ε′ ≈ 9.77 × 10⁴ at 1 kHz for <i>x</i> = 0.4) via mechanisms of Maxwell–Wagner polarization and small-polaron hopping. The lowest dielectric loss (tanδ ≈ 0.23 at 1 kHz for <i>x</i> = 0.3) is achieved due to refined grain boundaries that suppress carrier scattering. Impedance spectroscopy quantifies the respective contributions of grains and grain boundaries, identifying resistive interfaces as critical for interfacial polarization. Concurrently, UV–Vis diffuse reflectance spectroscopy demonstrates composition-dependent bandgaps (ranging from 2.17 to 2.46&#xa0;eV) and reduced Urbach energy (from 370 to 322&#xa0;meV), indicating improved crystallinity and effective defect control. This work establishes (1-<i>x</i>)LaFeO₃-<i>x</i>BaFeO₃ composites as a promising platform for low-loss capacitive energy storage and visible-light-driven photonic applications, underpinned by structure–property relationships mediated by defects.</p>