The formation of core–shell structure plays a very important role in temperature stable BaTiO3-based dielectric ceramic for multilayer ceramic capacitors applications. In this work, the rare earth Dy modified BaTiO3 dielectric ceramics have been prepared by chemical coating method, which possess high dielectric constant and high insulation resistivity, satisfying the EIA X7R specification. The existence of core–shell structure was proven by transmission electron microscopy observation and energy dispersive spectroscopy analysis. Experimental results show that the sintering temperature has a strong effect on the core–shell structure evolution in Dy-doped BaTiO3 ceramics. Thus, selecting an appropriate sintering temperature is conducive for improving the temperature stability for multilayer ceramic capacitors applications. Furthermore, impedance analysis and the highly accelerated lifetime test show that the core–shell structure evolution has a closely relationship with the reliability accompanied by the increasing of sintering temperatures.