Abstract (Li + Nb) co-doped (Li + Nb)xFe2-xO3 (with x = 0.0005, 0.005, 0.05, and 0.1) ceramics were prepared by sol-gel method. Their structural, dielectric, humidity, and magnetic properties were investigated. Colossal permittivity (~104) was approached or achieved in all doped samples even with a very small doping level of x = 0.0005. The colossal permittivity behavior is composed of two dielectric relaxations with the low-temperature one being a polaron relaxation due to electrons hopping between Fe3+ and Fe4+ ions and the high-temperature one being a Maxwell-Wagner relaxation caused by humidity-sensing properties.