Rare earth Yb-doped bismuth titanate Bi4-xYbxTi3O12 (BYT) nanocrystalline powders were obtained by a modified sol-gel method. TG-DTA, FI-IR and XRD were used to determine the lowest heat treatment temperature. Phase changes in the formation of BYT crystalline powders were discussed by XRD. The effect of Yb3+ cation substitution for Bi3+ cation on the microstructure of BYT was also developed with XRD. The grain size of BYT nanopowders is about 40 nm determined by TEM.