A sol-gel method has been utilized to prepare lead-free 2 mol% Er-doped K0.5Na0.5NbO3-xLiNbO3 (Er-KNN-xLN, x = 0, 0.08 and 0.10) ceramics. The X-ray diffraction results show that the ceramics have the perovskite structure and Er3+ ions have diffused into the host lattice. Compared to the solid-state reaction method, the sol-gel method is favor to reduce the sintering temperatures (~ 50 °C) of ceramics. Better compositional homogeneity, as well as finer and uniform grains is resulted from the sol-gel process, which have been confirmed by the scanning electron microscope images. The photoluminescence properties of ceramic bulks have been systemically studied. Under the excitation of 980 nm, the ceramics exhibit visible up-conversion green (510-570 nm) and red (640-685 nm) emissions. The emission colors of them are located in the yellowish green region. The down-conversion emissions in near-infrared (1450-1650 nm) and mid-infrared (2600-2870 nm) regions have been exhibited. The ferroelectric, dielectric and piezoelectric properties of ceramics have also been investigated. Because of the good electrical and excellent photoluminescence performances, our sol-gel-derived Er-doped KNN-LN ceramics should have great potential for multifunctional optoelectronic applications, such as optical-electro integrated materials and devices.