Thermoelectric coolers (TECs) offer a site-specific, on-demand, and solid-state thermal management solution for on-chip electronics cooling. To maximize their cooling performance, it is essential to integrate an effective heat exchanger, such as microchannels, on the TEC’s hot side. However, traditional microchannel heat sinks pose challenges, including the necessity for high-cost equipment and the manifestation of deleterious parasitic contact thermal resistance with the TEC. Recent studies have demonstrated the superior performance of teardrop-shaped microchannels compared to their conventional counterparts, yet their effectiveness at the milli-scale remains unexplored. In this work, through systematic numerical simulations across nine milli-channels with distinct variable cross-sections, we propose a teardrop-shaped milli-channel heat sink designed for fabrication through cost-effective mechanical machining. The optimized teardrop-shaped milli-channel exhibits a superior overall thermo-hydraulic performance evaluation factor (PEC) of approximately 1.8 with respect to its rectangular cross-sectional counterpart. Furthermore, we seamlessly embed the designed milli-channel heat sink into the substrate of the TEC to mitigate the parasitic contact thermal resistance. Measurements on the TEC embedded with the teardrop-shaped milli-channel heat sink show that the cold end temperature reaches a minimum value of −18.6 °C at an optimal input electrical current of 3.5 A and an inlet coolant flow velocity of 0.2 m/s. This temperature represents an improvement of approximately 3.5 °C and 4.4 °C compared to the TEC with an attached teardrop-shaped milli-channel and a conventional water block heat sink, respectively, under identical operating conditions. Additionally, a prototype TEC cooling system with the embedded teardrop-shaped milli-channel for high-power field-effect transistor (FET) cooling is demonstrated. Operating at an input electrical current of 3.5 A and an inlet flow velocity of 0.6 m/s, our proposed TEC cooling system achieves a steady-state working temperature of 51.3 °C for the FET at a high heat flux of 75 kW/m2, outperforming the TEC with an attached teardrop-shaped milli-channel and a conventional water block heat sink by approximately 1.4 °C and 2 °C, respectively.