Er3+-doped CaBi4Ti4O15 (CBT) bismuth layer structured ferroelectric ceramics were synthesized by the solid state method. Photoluminescence (UC), dielectric, ferroelectric, and piezoelectric properties were systematically studied for the first time. The Er3+-doped CBT sample showed a bright up-conversion UC while simultaneously obtaining an increased Curie temperature (Tc), enhanced ferroelectric and piezoelectric properties. The UC properties of Er3+-doped CBT were investigated as a function of Er3+ concentration and incident pump power. A bright green (556 nm) and a weak red (674 nm) emission bands were obtained under excitation (980 nm) at room temperature, which correspond to the transitions from 4S3/2, and 4F9/2 to 4I15/2, respectively. The dependence of UC emission intensity on pumping power indicated that three-photon and two-photon processes are involved in the green and red UC emission, respectively. Studies on dielectric properties indicated that the introduction of Er increased the Tc with relatively smaller values of dielectric loss of CBT, thus making this ceramic suitable for sensor applications at higher temperatures. Ferroelectric and piezoelectric measurements showed that the Er3+-doped ceramics showed an increase in remnant polarization and piezoelectric constant. As a multifunctional material, Er-doped CBT ferroelectric oxide showed great potential in sensor, optical-electro integration, and coupling device applications.