As a promising mid-temperature thermoelectric material, GeTe-based alloys have been intensively studied recently. Besides high figure of merit (ZT), good service stability is also significant for the practical applications of thermoelectric materials, which is especially a challenge for GeTe-based alloys having phase-transition behaviors. In this work, we have demonstrated a MgB2-alloying strategy to simultaneously enhance the mechanical and thermoelectric performance of GeTe-based alloys, owing to the tuning of chemical bonding. The negative coefficient of thermal expansion (CTE) of GeTe near the phase-transition temperature can be fully eliminated through co-alloying of Sb and MgB2. The enhancement of compressive strength and hardness by MgB2 alloying can be mainly ascribed to the solid-solution effect and the tuning of grain structures. Moreover, the Mg-substitution induced delocalization of electrons and modulation of band structures can facilitate the transport of charge carriers. Combining these MgB2-alloying effects, we can obtain (Ge0.9Sb0.1Te)1-x(MgB2)x samples with a peak ZT of 1.92 at 773 K and average ZT of 1.1 within 300–773 K, smooth CTE in the whole working temperatures, high compressive strength of ∼271 MPa and Vickers hardness of ∼236 Hv. The chemical-bonding mechanism developed in this work should also be potential for enhancing the overall performance of other thermoelectric materials.