The electronic structures of ferroelectric bismuth titanate are investigated by first-principles method. The structure stability and the origin of the advantageous functional properties of ferroelectric and nonlinear optical properties are discussed. It is shown that the monoclinic structure is more stable than the orthorhombic structure. The remarkable ferroelectric property largely originates from the Ti-O hybridization. which is enhanced by the Bi-O hybridization. The nonlinear optical property in bismuth titanate and related perovskite oxide materials are mainly derived from the virtual electronic excitation from the filled valence band to the empty cationic d-orbital at the short equilibrium bond lengths. (C) 2004 Elsevier B.V. All rights reserved.