Multiferroic properties are found in the Yttrium iron garnet (YIG) modified with Bi3+. The X-ray diffraction pattern shows that the Bi3+ ion is completely soluble up to one-third of the Y molar content forming the Y2BiFe5O12 compound as a single phase. Structural analysis did not show signals of other incipient non-centrosymmetric phases in the compound. However, the dielectric and polarization studies clearly exhibit a typical relaxor ferroelectric behavior at room temperature where the maxima of the broad permittivity peaks shift with frequency. The quadratic diffuseness coefficient obtained from the modified Curie–Weiss law suggests polar nanoregion switching in a broad temperature range. Using the Vogel–Fulcher relationship, the activation energy and freezing temperature were found to be 243.1 meV and 322.6 K, respectively. Here, the main contribution to relaxation comes from thermally activated reorientation of the dipole moments, as confirmed by the well-defined hysteresis loops in the P-E measurements. The dipole fluctuations arise from the compositional disorder induced by Bi3+ ions randomly distributed in the lattice, having thermally active polarization fluctuations above the freezing temperature, Tf. Furthermore, it is found that Bi3+ preserves the magnetization features of this compound. Thus, the Bi3+ modified YIG compound is found to be a multiferroic material at room temperature.