Simultaneously improving the mechanical and thermoelectric (TE) properties is significant for the engineering applications of inorganic TE materials. In this work, a novel nanodomain strategy is developed for Ag2Te compounds to yield 40% and 200% improved compressive strength (160 MPa) and fracture strain (16%) when compared to domain‐free samples (115 MPa and 5.5%, respectively). The domained samples also achieve a 45% improvement in average ZT value. The domain boundaries (DBs) provide extra sites for dislocation nucleation while pinning the dislocation movement, resulting in superior strength and ductility. In addition, phonon scattering induced by DBs suppresses the lattice thermal conductivity of Ag2Te and also reduces the weighted mobility. These findings provide new insights into grain and DB engineering for high‐performance inorganic semiconductors with robust mechanical properties.