Membrane Distillation (MD) is a promising and evolving technology with substantial potential for efficient freshwater production. However, most of the traditional MD systems typically incorporate several components, including a coolant chamber, coolant stream, coolant pump, chiller, and coolant lines. Eliminating these key components offers numerous benefits to MD systems. Therefore, this work presents an experimental investigation of a novel hybrid air gap membrane distillation (AGMD) unit coupled with thermoelectric modules (TEMs). The thermoelectric module acts as a heat pump by simultaneously providing both the heating and the cooling demands of the air gap membrane distillation unit. In the TEM-AGMD prototype, the hot surface of the TEM is deployed to heat the feed stream to be treated, while the cold side of the TEM is in close contact with the AGMD condensation plate, thereby eliminating the need for the cooling stream, coolant line, coolant pump, chiller, and coolant chamber. Thus, the investigated system exhibited fewer components and needed no pumping power for the cooling stream, resulting in a compact and an energy efficient membrane distillation (MD) system. Results from the experiment indicate that optimal system performance can be achieved by increasing the number of thermoelectric modules, implementing multi-stage membrane distillation, and intensifying the circulating feed flowrate. Furthermore, operating the thermoelectric modules at high power input boosts unit productivity but worsens the unit's specific energy consumption. Moreover, the proposed TEM-AGMD unit can achieve a minimal specific energy consumption of 962 kWh/m3. The proposed prototype boasts an easy design that enables outstanding water desalination with exceptional salt rejection and minimal power consumption. The combination of thermoelectric module with membrane distillation, capitalizing on recent advancements in MD technology, holds great promise for developing a hybrid system for decentralized water treatment and desalination.