The second phase and defect formation mechanisms of [Bi 0.5(Na1-xKx )0.5]TiO3 (BNKT100x) ceramics were investigated using electron microscopy, X-ray photoelectron spectroscopy (XPS), and electrical properties measurement. Experimental results indicated that second phase formation induces Bi-rich regions and compositional inhomogeneity within the matrix owing to the thermodynamic stability of potassium titanate. The Ti valence transition for BNKT ceramics sintered in air might be ascribed to the formation of secondary phase and low oxygen atmosphere, rather than simply attributed to the volatilization of bismuth. Li substitution at the A-site in BNKT ceramics suppresses formation of the second phase and Ti valence transition. Appropriate atmosphere control during material processing, such as sintering at higher oxygen pressure, and post oxidization annealing suppress oxygen vacancies and titanium valence transition, and therefore decrease the leakage current as well as improve electrical properties.