Structural phase transitions drive several unconventional phenomena including some illustrious ferroic attributes which are relevant for technological advancements. On this note, we have investigated the ferroelastic structural transition of perovskite-type trigonal Ba2ZnTeO6 across Tc ∼ 150 K. With the help of Raman spectroscopy and density-functional theory (DFT)-based calculations, we report new intriguing observations associated with the phase transition in Ba2ZnTeO6. We observed the presence of a central peak (quasi-elastic Rayleigh profile), huge softening in the soft mode, hysteretic phonon behavior, and signatures of coexistent phases. The existence of a central peak in Ba2ZnTeO6 is manifested by a sharp rise in the intensity of the Rayleigh profile concomitant with the huge damping (or softening) of the soft mode (at ∼31 cm-1) near Tc, shedding light on the lattice dynamics during the phase transition. This is further corroborated by our phonon calculations that show that the soft mode (Eg) in the high-symmetry structure involving TeO6 octahedral rotation (with Ba and Zn translation) condenses into Ag and Bg modes in the C2/m low-symmetry phase. While most of the phonon bands split below Tc confirming the phase transition, we observed thermal hysteretic behavior of phonon modes, which signifies the first-order nature of the transition and the presence of coexisting phases as corroborated by our temperature-dependent X-ray diffraction and specific heat measurements.