In this paper, bismuth ferrite (BFO) particles synthesized by controlled hydrothermal process, where the particles of small sizes and with high purity were obtained. Structural analysis showed that non-annealed powder can be perfectly fitted to rhombohedral space group R3c and contains a very small amount of secondary phase, whereas the final product (annealed at 800 °C) represents single-phase perovskite powder with high crystallinity. HRTEM analysis confirmed existence of twin stacking faults, which are responsible for enhanced magnetic properties. EPR measurements suggested existence of electrons trapped by vacancies or defects. It has been proposed that existence of Fe3+−OV defect complex could be generated at elevated temperatures followed by formation of trivalent Fe ions, which intensely provide local 3d moments.