AbstractThermoelectric materials are highly promising for waste heat harvesting. Although thermoelectric materials research has expanded over the years, bismuth telluride‐based alloys are still the best for near‐room‐temperature applications. In this work, a ≈38% enhancement of the average ZT (300−473 K) to 1.21 is achieved by mixing Bi0.4Sb1.6Te3 with an emerging thermoelectric material Sb2Si2Te6, which is significantly higher than that of most BiySb2−yTe3‐based composites. This enhancement is facilitated by the unique interface region between the Bi0.4Sb1.6Te3 matrix and Sb2Si2Te6‐based precipitates with an orderly atomic arrangement, which promotes the transport of charge carriers with minimal scattering, overcoming a common factor that is limiting ZT enhancement in such composites. At the same time, high‐density dislocations in the same region can effectively scatter the phonons, decoupling the electron‐phonon transport. This results in a ≈56% enhancement of the thermoelectric quality factor at 373 K, from 0.41 for the pristine sample to 0.64 for the composite sample. A single‐leg device is fabricated with a high efficiency of 5.4% at ΔT = 164 K further demonstrating the efficacy of the Sb2Si2Te6 compositing strategy and the importance of the precipitate‐matrix interface microstructure in improving the performance of materials for relatively low‐temperature applications.