Using an acetate-alkoxide sol-gel route in which the precursors are barium acetate, yttrium isopropoxide and titanium diisopropoxide bis-acetylacetonate, we prepared a ferroelectric material with the formula: Ba1-xYxTiO3, x = 0.005. SEM analysis showed a polymeric microstructure of the gel due to the chelated titanium alkoxide precursor used as starting materials. The evolution of the structure and microstructure of the precursor gel heated at temperatures up to 1000 degrees C was studied by various techniques. The powder obtained by heating the gel at 1100 degrees C presented a homogeneous structure consisting of submicronic particles (approximately 200 nm). XRD and SAED analyses revealed that Ba0.995Y0.005TiO3 nanocrystals of about 5-10 nm appeared at 600 degrees C, together with BaCO3. The presence of barium carbonate was identified also by IR spectroscopy and thermal analyses. The ceramics obtained from the as-prepared powder presented good dielectric properties (capacitance = 840 pF/dielectric constant = 3860 and dielectric loss (tandelta) = 0.078 at Curie temperatures of 120-121 degrees C).