Magnetic, dielectric, and magnetoelectric properties in a spin-state transition system are examined, motivated by the recent discovery of multiferroic behavior in a cobalt oxide. We construct an effective model Hamiltonian on the basis of the two-orbital Hubbard model, in which the spin-state degrees of freedom in magnetic ions couple with ferroelectric-type lattice distortions. A phase transition occurs from the high-temperature low-spin phase to the low-temperature high-spin ferroelectric phase with an accompanying increase in spin entropy. The calculated results are consistent with the experimental pressure-temperature phase diagram. We predict the magnetic-field induced electric polarization in the low-spin paraelectric phase near the ferroelectric phase boundary.