n-type Bi2Te2.7Se0.3 (BTS) alloy is a state-of-the-art room temperature thermoelectric material used for refrigeration commercially. However, wide application is limited by its low performance. Here, we show that incorporation of nano-sized 3D topological insulator (3D-TI) Bi2Se3 in Bi2Te2.7Se0.3 bring about a large electron mobility and increased electrical conductivity owing to the enhanced contribution of topologically protected conducting surface states as well as large Seebeck coefficient due to energy dependent carrier scattering. Besides, the incorporation of 3D-TI nanoinclusions leads to enhanced phonon scattering. As a result, addition of 0.3 vol% of Bi2Se3 in BTS results in ~ 36% increase in power factor and ~ 16% decrease in total thermal conductivity, leading to a large figure of merit ZTmax = 1.28 (at 375 K) and a large average ZTave = 1.16 (at T = 300–525 K), which are 62% and 59% greater than that of BTS, respectively.