In this work, we used the sol–gel method with synergistic auto-combustion to fabricate Co0.8Li0.4Fe2−xAlxO4 ferrite nanoparticles (FNPs) with Al3+ substitution, and investigated their structural, dielectric, and magnetic properties. Citric acid (C6H8O7.H2O) was chosen as a chelating agent with a metal nitrate-citrate ratio of 1:3. The x-ray diffraction (XRD) pattern confirmed the crystalline development in the Co0.8Li0.4Fe2−xAlxO4 FNPs to a single phase with cubic geometry and spinel structure belonging to the space group Fd-3m oh7. The lattice constant ( \(a\) ) of Co-Li FNPs (x = 0.0) was recorded as 8.348 ± 0.002 Å, which was found to be decreased after Al-substitution up to 8.315 ± 0.002 Å for x = 0.6. The crystallite size (D) employing the Debye-Scherrer formula was found in the range of ~ 11–22 nm. High-resolution transmission electron microscopy (HRTEM) images showed single-crystal Co0.8Li0.4Fe2−xAlxO4 FNPs with a nearly spherical shape. The average particle size ( \({D}_{{\text{avg}}}\) ) determined through skewed histogram charts suggested a range up to ~ 21–28 ± 10 nm. The optical properties were studied by UV-visible spectroscopy. Adsorption-desorption curves were used to obtain pore size and volume. The dielectric constant ( \(\varepsilon^{\prime }\) \()\) , dielectric loss ( \(\varepsilon^{\prime \prime }\) ) and dielectric loss tangent (tan δ) all decreased exponentially with an increase in frequency. The substitution of Al3+ ion led to an increase in all dielectric parameters. The plot of magnetization versus applied magnetic field (M-H) showed that saturation magnetization decreased with Al3+substitution. The decrease in magnetization was attributed to the decrease in A–B interaction and may be due to the substitution of non-magnetic Al3+ ions.