This study investigates the effects of doping BaTiO3 with MgO and Y2O3 on the formation of core–shell structure. The MgO and Y2O3 enhanced the shrinkage upon sintering and inhibited the grain growth, respectively. However, increasing the amount of Y2O3 to 3.0 mol% suppressed the shrinkage upon sintering. The results of the diffusion experiment revealed that Y3+ was dissolved in the BaTiO3 lattice to a depth of 5–10 nm inside the grains, whereas Mg2+ tended to remain close to the surfaces of the grains when sintered at 1150°C for 18 h, suggesting that Y3+ may have had a higher diffusion rate than Mg2+. The Mg2+ prevented the diffusion of Y3+ into the core during sintering. Therefore, Mg2+ plays an important role as a shell maker in the formation of the core–shell structure in the codoped system. The core–shell structure can be obtained in BaTiO3 ceramics that are codoped with MgO and Y2O3 upon sintering at 1150°C for 3 h.