Application of a magnetic field greatly enhances the thermoelectric efficiency of bismuth-antimony (Bi-Sb) alloys. We synthesized a hybrid of Bi-Sb alloy and magnetic nanoparticles, expecting improvement of the thermoelectric performance due to the magnetic field generated by the nanoparticles. Powder x-ray diffraction and magnetic measurements of the synthesized hybrid Bi 0.88 Sb 0.12 (FeSb) 0.05 sample indicated that the ferromagnetic FeSb nanoparticles, with a size of about 30 nm, were distributed in the main phase of the Bi-Sb alloy. The FeSb nanoparticles act as soft ferromagnets in the diamagnetic host Bi-Sb alloy. The electrical resistivity q of the host Bi 0.88 Sb 0.12 sample decreased concomitantly with decreasing temperature, showing a shoulder at 80 K. In contrast, q for the hybrid sample was enhanced below 100 K because of carrier scattering by the nanoparticles. The temperature dependence of the Seebeck coefficient S was also altered by the nanoparticle addition. In contrast, the addition of magnetic nanoparticles only slightly influenced the thermal conductivity j. These results indicate that the addition of magnetic nanoparticles to thermoelectric materials modulates the electronic structures but does not influence the lattice system.