Barium titanate (BaTiO3) ceramics co-doped with rare-earth elements were investigated in terms of selective substitution and tetragonality. The dielectrics were designed by addition of various Dy2O3 and Tm2O3 contents, for a total of 1 mol. % concentration, and analyzed in a temperature range from −55°C to 150°C. The dielectric constant of the 0.7 mol. % Dy2O3 and the 0.3 mol. % Tm2O3 co-doped BaTiO3 was 2250, which was about 27% higher than those of specimens doped with 1 mol. % Tm2O3 and 1 mol. % Dy2O3 at room temperature. The tendency of dielectric properties was verified through the changes of lattice parameters and binding energy. The substitution of Dy3+ led to a decrease of tetragonality and grain growth; however, amphoteric substitution caused by the co-doping of Dy2O3 and Tm2O3 compensated for those adverse effects. It can be concluded that the improvement of dielectric properties originated from the increase of the site substitution rate of Dy3+ and Tm3+ ions according to the ionic size the in rare-earth doped BaTiO3 system.