We have synthesized Bi-substituted gadolinium iron garnet [(Gd3−xBix)Fe5O12] samples with x = 0, 0.5, and 1.0 and studied their structural, magnetic, and dielectric properties. All samples are found to be in single-phase form with cubic structure as per the Rietveld analysis based on $$Ia\bar{3}d$$ Ia3¯d space group. Bi substitution leads to increase in lattice constant, Fe(a)–Fe(d) bond length and Fe(a)–O–Fe(d) bond angles, and they have direct influence on magnetic properties. All samples undergo ferrimagnetic transition followed by magnetic compensation behavior at low temperature. The ferrimagnetic transition temperature (Tc) is found to increase from 576 K for x = 0 to 596 K for x = 1.0. However, the magnetic compensation temperature (Tcomp) decreases from 296 to 176 K. They are explained in terms of increase in Fe(a)–O–Fe(d) bond angle and the dilution of magnetic moment at Gd site. The analysis of impedance spectra at room temperature and at higher temperature shows that Bi substitution gives rise to larger impedance due to the localization as well as reduction in the concentration of charge carriers. The activation energy of charge-carrier relaxation is found to be in the range of 0.9–1.0 eV. The temperature variation of dielectric constant data and their analysis based on modified Curie–Weiss law show the relaxor ferroelectric transition with a typical diffuseness exponent, γ close to 2.0.