Composite thin films of 1–x [Bi_0.5Na_0.5TiO₃] – x [K_0.5Na_0.5NbO₃ + 1 wt% Gd₂O₃] (BNT–KNNG); (x = 0.01) have been deposited at various O₂ pressures from 0.1 to 10 Pa by pulsed laser deposition, and their crystal structure, surface morphology, optical, dielectric, and ferroelectric properties were investigated. X-ray diffraction analysis of thin films deposited at 0.1 Pa revealed a single phase of BNT–KNNG and further (> 0.1 Pa), film crystallinity gradually increased with a rise in O₂ pressure. The improvement in the refractive index and a reduction in optical bandgap are observed with O₂ pressure and are estimated to be 2.28–2.42 and 4.08–3.65 eV, respectively. The third-order nonlinear optical coefficients estimated using the Z-scan technique are found to be enhanced with O₂ pressure. The film deposited at 10 Pa exhibited a higher nonlinear refractive index (n₂ = 6.188 × 10^− 6 cm²/W) and a strong absorption coefficient (β = 1.043 cm/W). The temperature-dependent dielectric response displayed two structural phase transitions from rhombohedral to tetragonal phase at 165 ^oC and tetragonal to cubic phase at 298 ^oC. The enhanced dielectric (ε_r = 411, tanδ = 0.156 @ 1 kHz), Microwave dielectric (ε_r = 317 and tanδ = 0.0074 @ 10 GHz), and ferroelectric (P_r = 25.31 µC/cm², E_C = 42.62 kV/cm @ 1 kHz) properties with low leakage current are observed for the film deposited at 10 Pa which followed a space charge limited conduction behavior. The obtained microwave and nonlinear optical properties of BNT–KNNG composite films are suitable for tunable microwave and optical photonic device applications.