The electromechanical behavior and phase transition of lead-free piezoelectric Bi1/2K1/2TiO3 (BKT) can be modified without changing the processing parameters, composition, or microstructure through post-densification thermal treatment. Although this provides a method to control the disorder and, thereby, the thermal stability, the role of annealing atmosphere remains not well understood. In this work, solid-state processed BKT was annealed with varying cooling rates (5 K/min to 0.1 K/min) and atmospheres (air, oxygen, nitrogen) in order to investigate influence on the functional properties. Crystal structure analysis revealed an enhanced evaporation of volatile constituents of BKT ceramics, namely Bi3+ and K+ after the annealing in oxygen atmosphere, leading to decreasing properties, i.e., dielectric response. Also, a suppression of the relaxor-to-ferroelectric transition is observed in the dielectric response at lower cooling rates, demonstrating the influence of the atmosphere and cooling rate during thermal process in BKT. The findings are linked to structural changes respectively defect content (A-sites vacancies) and chemical homogeneity of A-site cations in BKT atmospherically annealed samples.