Substitution of bismuth by rare earth (RE) ions is of great technological importance to develop room-temperature BiFeO3-based multiferroic materials. Despite this interest, many fundamental properties and the structure-property correlations of RE-doped BiFeO3 remain poorly understood. Here we report a systematical experimental and theoretical exploration on the structural phase transition in Bi1-x La x FeO3 (0 ⩽ x ⩽ 0.2) ceramics. By using x-ray absorption fine structure spectroscopy, we for the first time show that the La3+ dopants in fact substitute the Bi site of secondary nanosized particles with orthorhombic Pbam symmetry instead of the long-believed parental rhombohedral R3c phase at all La3+ doping concentrations (0.001 ⩽ x ⩽ 0.2). This homogeneously mixed two-phase compound cannot be detected by the x-ray diffraction until La content approaching x = 0.1. The finding is further supported by complementary studies of transmission electron microscopy and thermodynamic preference, and it casts serious challenges on the prevailing assumption of La3+ substitution on the Bi3+ site in R3c structure when x ⩽ 0.1 as well as the previously proposed origin of enhanced functional properties based on morphotropic phase boundary. This new insight may ignite a revival on exploring the underlying multiferroic mechanisms in BiFeO3-based materials and facilitate the bottom-up design of novel multifunctional devices.