Fine powders of bismuth potassium titanate (Bi1/2K1/2)TiO3 (BKT) synthesized by hydrothermal reactions have been reported to have good sinterability and high chemical stability against long-time sintering. In this study, detailed chemical and structural characterizations were performed on a hydrothermal BKT powder sample to identify the origin of such properties. The results of X-ray diffraction, infrared transmittance, and diffuse reflectance measurements revealed that the hydrothermal BKT particle contained high concentrations of lattice hydroxyl group and Bi vacancy, whereas the observation by transmission electron microscope showed that its surface was covered with numerous Bi2O3 nanoparticles to achieve the overall stoichiometric cation ratio of BKT. We found that the unique composite nanostructure of the hydrothermal BKT powder led to a large suppression of Bi evaporation during high-temperature sintering, thereby contributing to its superior chemical stability.