Half-Heusler (HH)-based alloys are promising candidates for high-temperature thermoelectric (TE) energy conversion materials due to their excellent adaptability in high-temperature regions (900 - 1100 K). However, their TE performance is greatly limited owing to the inherently high lattice thermal conductivity (κl). In this study, we introduce a synergistic strategy to reduce thermal conductivity while modifying electrical transport properties through yttrium oxide (Y2O3) dispersion. The binary NiSn compound precipitations with sub-micron dimension together with Y2O3 nanoparticles synergistically intensify the phonon scattering and enhance the seebeck coefficient (S) effectively via energy filtering effect (EFE) at hetero-interfaces, leading to a remarkable reduction in κl and a slight improvement in the power factor (PF). Consequently, upon 1.5 wt% Y2O3 introduction, the sample incorporating Y2O3 exhibits a ∼13% reduction in total thermal conductivity (κt) as compared to the HH matrix, reaching a peak ZT of 0.86 at 938 K, thereby successfully optimizing its TE performance. The presented strategy provides a feasible approach to simultaneously modulate the thermal and electrical transport behaviors to improve the TE performance of HH-based materials.