Lead-free (1−x/2) K0.5Na0.5Nb0.95Ta0.05O3–x/2Fe2O3 piezoelectric ceramics (x=0, 0.2, 0.4, 0.6, 0.8, 1.0, 2.0, and 3.0 mol%) have been prepared by conventional ceramic sintering process. The effects of doped iron element on the structure, dielectric, and piezoelectric properties were investigated. The introduction of ferric oxide (Fe2O3) was effective in improving the piezoelectric properties and sintering characteristics by refining grain size, reducing micropores and increasing the density of the ceramics. The bulk density reached the steady value of around 4.52 g/cm3, about 96% of the theoretical value. The samples with x=0.4 mol% show the maximum values of the piezoelectric coefficient (d33=130 pC/N) and the planar electromechanical coupling coefficient (kP=37.2%), which is significantly enhanced compared with the undoped samples. K+ and Na+ vacancies and charge compensation of the diffused Fe ions in the ceramics induce domain wall motions, which might be responsible for the improvement of structure and electrical properties. Fe2O3 was considered to be a “soft” addition for alkali niobate piezoelectric ceramics at low doping concentration.