In this work, a phase diagram of A- and B-site co-substituted 0.96[{Bi_0.5 (Na_0.84K_0.16)}_1−x−yLi_xMg_y(Ti_1−zNb_z)O₃]–0.04SrTiO₃ (abbreviated as LMN-doped BNKT–ST), where x, y and z = 0.00–0.030, was schematically constructed on the basis of crystal structure and electromechanical, dielectric and piezoelectric properties. The underlying mechanism of the compositionally-induced non-ergodic (NR) to ergodic relaxor (ER) phase transition was explored, and emphasis was given on relating the chemically-induced polymorphic structural phase transition to the dynamics of polar nano-regions (PNRs) and their random fields, which strongly affect the dielectric, ferroelectric, piezoelectric and field-induced strain properties of the investigated system. X-ray diffraction patterns revealed that LMN doping resulted in a transition from coexistence of rhombohedral and tetragonal phases to a pseudocubic phase. Both the dielectric constant and the ferroelectric–relaxor transition (T_F–R ∼ 100 °C) temperature decreased with an increase in LMN content. The piezoelectric and ferroelectric responses of the BNKT–ST ceramics were significantly decreased by the addition of LMN. However, the destabilization of the piezoelectric and ferroelectric properties was accompanied by significant enhancements in the bipolar and unipolar strains. A large electric-field-induced strain (S = 0.28%) and a corresponding dynamic piezoelectric constant (S_max/E_max) of 560 pm V⁻¹ were observed under the driving field of 5 kV mm⁻¹ when 1.5 mol% LMN was substituted on respective sites. This significant strain enhancement at this composition, with LMN = 0.015, may be attributed to both the field-induced reversible structural transition and the compositionally-induced NR to ER phase transition. The composition- and temperature-dependence of the energy storage density (W) were studied to demonstrate the practicability of the LMN-doped BNKT–ST. It was found that the addition of LMN enhanced the difference between maximum polarization and remnant polarization, resulting in an improvement of the energy storage properties. For the composition with LMN = 0.020, a nearly temperature-invariant large recoverable energy density (W = 0.70 J cm⁻³) was achieved under 5.5 kV mm⁻¹ in the wide temperature range of 100–150 °C. These properties indicate that the synthesized system might be a promising lead-free candidate for actuator and energy storage capacitor applications.