Mg3(Sb,Bi)2 alloys offer exceptional near‐room temperature thermoelectric (TE) performance comparable to Bi2Te3. However, the low carrier mobility due to Mg vacancies and relatively high lattice thermal conductivity adversely affect overall TE performance. Herein, carrier mobility and thermal conductivity of Mg3(Sb,Bi)2 are decoupled by modulating both the phase interface and grain boundaries through incorporating different sizes of iron (Fe). Ferromagnetic micrometer‐sized Fe particles enhance the figure of merit (ZT) more than superparamagnetic nano‐sized counterparts. Magnetic moments of Fe induce the charge density overlap near phase boundaries and ≈1 nm Fe interfacial layer lowers grain‐boundary barriers, leading to sharply increased carrier mobility. Moreover, the additional magnon‐phonon scattering reduces lattice thermal conductivity by over 40%. Consequently, Fe/Mg3(Sb,Bi)2 composite achieves a high average ZT of 1.4 over room temperature to 573 K. The fabricated Mg3(Sb,Bi)2‐CdSb module demonstrates a high conversion efficiency of 8.4% under a 275 K temperature gradient, among the best for Mg3(Sb,Bi)2‐based modules. This work uncovers the role of thermo‐electro‐magnetic interactions in bolstering TE performance and inspires the development of low‐cost, high‐efficiency TE modules for low‐grade heat recovery.