Polycrystalline perovskite Eu0.98Ba0.02TiO3, in which Eu2+: 4f7 spins order antiferromagnetically below $T_{N} = 4.6$ K, shows a large positive magnetodielectric effect (MDE) and a negative magnetoresistance (MR) in the paramagnetic state. The MDE $\sim +120$ % and MR $\sim -91$ % for $f = 1$ kHz at $T =10$ K and under $\mu _{0}H = 7$ T. The field dependence of the MDE and the MR is distinct. While the magnitude of the MR increases rapidly for $\mu _{0}H < 1$ T and nearly saturates for $\mu _{0}H > 3$ T, the MDE shows a small value for $\mu _{0}H < 1$ T and increases smoothly without saturation above 1 T. It is suggested that a bound magnetic polaron forms around oxygen defects in zero field for $T \le 50$ K. The negative MR is suggested due to the increase in the size of the magnetic polaron and their percolation with increasing magnetic field. On the other hand, the positive MDE arises due to spin–phonon coupling possibly driven by the hybridization of Eu-4f and O-2p orbitals.