Direct conversion of thermal energy to electricity by thermoelectric (TE) devices may play a key role in future energy production and utilization. However, relatively poor performance of current TE materials has slowed development of new energy conversion applications. Recent reports have shown that the dimensionless Figure of Merit, ZT, for TE devices can be increased beyond the state-of-the-art level by nanoscale structuring of materials to reduce their thermal conductivity. New morphologically designed TE materials have been fabricated at the NASA Langley Research Center, and their characterization is underway. These newly designed materials are based on semiconductor crystal grains whose surfaces are surrounded by metallic nanoparticles. The nanoscale particles are used to tailor the thermal and electrical conduction properties for TE applications by altering the phonon and electron transport pathways. A sample of bismuth telluride decorated with metallic nanoparticles showed less thermal conductivity and twice the electrical conductivity at room temperature as compared to pure Bi 2 Te 3 . Apparently, electrons cross easily between semiconductor crystal grains via the intervening metallic nanoparticle bridges, but phonons are scattered at the interfacing gaps. Hence, if the interfacing gap is larger than the mean free path of the phonon, thermal energy transmission from one grain to others is reduced. Here we describe the design and analysis of these new materials that offer substantial improvements in thermoelectric performance.