There has been a surge of research interest in the promising lead-free potassium−sodium niobate (KNN)-based ceramics, applications of which could be significantly promoted by improving thermal stability of piezoelectricity. Besides, endowing the KNN-based ceramics with photoluminescence property by rare-earth-ion doping can make them more completive lead-free counterparts in potential applications such as novel multifunctional sensing devices. Herein, a novel KNN-based ceramic material doped with Eu was elaborately designed to simultaneously obtain enhanced temperature-stable piezoelectricity and good luminescence property. By the introduction of diffused phase transition and the modulation of unit cell distortion, a large piezoelectric strain coefficient (d^*₃₃) with a small variation (590±59 pm/V) over a wide temperature range (from room temperature to 110 ℃) was realized. The optimal composition also exhibited a considerable piezoelectric coefficient (d₃₃) with small fluctuation (330±33 pC/N) from 20 to 80 ℃. In addition to the enhanced temperature-stable piezoelectricity, the luminescence of these ceramics was slightly enhanced with the elevation of BaZrO₃ (BZ) doping contents, which could be attributed to the increased compositional disorder and the decreased unit cell distortion of the matrix material. Moreover, an optical characteristic was more prominent at ultra-low temperatures. This work unprecedentedly provides a novel paradigm for the design of multifunctional KNN-based ceramics with enhanced temperature-stable piezoelectricity and good luminescence property, revealing the great potential of the rare-earth-element-doped KNN material for future applications in the novel multifunctional devices.