The present study reports the effects of La3+ and Al3+ substitution on the structural, dielectric, and piezoelectric properties of (1-x)(K0.5Bi0.5)TiO3-xLaAlO3 (named as KBT-LAO) (x = 0–0.03) ceramics. Rietveld refinement of room temperature synchrotron X-ray diffraction (SXRD) data showed a decrement in tetragonal distortion and an increase in cubic symmetry with the increase in LAO content. An additional dielectric anomaly was noticed in poled x = 0.03 LAO sample. A diffuse dielectric curve with an improved relaxor behavior was observed in temperature-dependent dielectric measurements with LAO incorporation in KBT. The enhancement in activation energy values (from 0.95 ± 0.01 eV to 1.24 ± 0.01 eV) signified the suppression of oxygen vacancies with LAO doping. The current-voltage (I-V) plot suggested an improvement in room temperature DC resistivity in KBT-LAO solid solution. An increasing trend was noticed in the piezoelectric charge coefficient value and was found to be maximum (d33 ~ 80 pC/N) for the 3 % LAO-doped sample. The improved piezoelectric voltage coefficient (g33 ~ 24 × 10−3 V m/N) was observed for the x = 0.03 LAO doped sample, which is a 60 % improvement over the pure KBT sample (g33 ~ 14 × 10−3 V m/N). Additionally, an energy harvesting experiment was performed on a piezo device prepared using poled 3 % LAO-doped ceramic. The peak-to-peak voltage & current of ~ 0.420 V & ~ 0.18 μA under normal finger tapping.