AbstractFiber‐based electronics are essential components for human‐friendly wearable devices due to their flexibility, stretchability, and wearing comfort. Many thermoelectric (TE) fabrics are investigated with diverse materials and manufacturing methods to meet these potential demands. Despite such advancements, applying inorganic TE materials to stretchable platforms remains challenging, constraining their broad adoption in wearable electronics. Herein, a multi‐functional and stretchable bismuth telluride (Bi2Te3) TE fabric is fabricated by in situ reduction to optimize the formation of Bi2Te3 nanoparticles (NPs) inside and outside of cotton fabric. Due to the high durability of Bi2Te3 NP networks, the Bi2Te3 TE fabric exhibits excellent electrical reliability under 10,000 cycles of both stretching and compression. Interestingly, intrinsic negative piezoresistance of Bi2Te3 NPs under lateral strain is found, which is caused by the band gap change. Furthermore, the TE unit achieves a power factor of 25.77 µWm−1K−2 with electrical conductivity of 36.7 Scm−1 and a Seebeck coefficient of −83.79 µVK−1 at room temperature. The Bi2Te3 TE fabric is applied to a system that can detect both normal pressure and temperature difference. Balance weight and a finger put on top of the 3 × 3 Bi2Te3 fabric assembly are differentiated through the sensing system in real time.