The microwave conductivity sigma(1)(c) and dielectric constant epsilon(1)(c) along the c-axis in lambda-(BEDT-TSF)(2)FeCl4 have been obtained by a cavity perturbation technique with TE011 resonant mode at 16.3 GHz. Even though the d.c. resistivity indicates a highly metallic state, we have found a novel dielectric response in epsilon(1)(c) amounting to the order of 10(3) from the metal-to-insulator transition temperature T-MI = 8.3 K to T-FM = 70 K, at which the noticeable specific-heat jump and H-1 NMR spectral splitting have been recently observed. The dielectric anomaly is attributed to the dynamical response of pi-electron's charge degrees of freedom and could be interrelated to the pi-d interaction. (C) 2002 Elsevier Science B.V. All rights reserved.