In most of the spin-induced multiferroics, the ferroelectricity is caused by inversion symmetry breaking by complex spin structures of the transition-metal ions. Here, we report the importance of interplay of 4f-3d magnetic interactions in inducing ferroelectricity in the centrosymmetric (Pnma) green phase compound Gd2BaCuO5. With decreasing temperature, a long-range incommensurate ordering of both Gd3+ and Cu2+ spins at TN = 11.8K occurs with the modulation vector k = (0, 0, g) and a lock-in transition to a strongly noncollinear structure with kc = (0, 0, 1/2) at Tloc ∼ 6K. Both spin structures induce electric polarization consistent with the polar magnetic space groups Pm1'(α, 0, g)ss and Paca21, respectively. Based on the symmetry analysis of magnetoelectric interactions, we suggest that the ferroelectricity in both commensurate and incommensurate phases is driven by a complex interplay of two-spins and single-spin contributions from magnetic ions located in noncentrosymmetric environments. Our study demonstrates that the green phase family of compounds may serve as a playground for studying the multiferroic phenomena, where the interplay of 4f -3d interactions demonstrates an alternative route to find magnetoelectric materials.