The changes in the ferroelectric and magnetic properties of the nanostructured Pb(Zr(0.52)Ti(0.48))(1-x)FexO(3) (0 <= x <= 0.06) due to the doping of different amounts of acceptor ions (Fe(3+)) have been studied. X-ray diffraction studies show that the system maintains the tetragonal phase up to the doping of 2 mol% of Fe(3+) and the formation of secondary phase magnetoplumbite (PbFe(12)O(19)) on further doping. Electron paramagnetic resonance studies have revealed the formation of defect centers which in turn arise due to the interaction of Fe(3+) ions with oxygen vacancies, which are generated in the lattice. This results in the appearance of room temperature ferromagnetic (RTFM) behavior in the doped samples. The dielectric studies reveal that with the concentration of Fe(3+) the peak near the maxima of dielectric constant (epsilon'(m)) is broadened. Studies of the defect dipoles on the ferroelectric properties have been performed by polarization measurement. The variations of the above properties with the structural and morphological features of the samples have also discussed.