Developing inexpensive and rapid fabrication methods for high efficiency thermoelectric alloys is a crucial challenge for the thermoelectric industry, especially for energy conversion applications. Here, we fabricated large amounts of p-type Cu0.07Bi0.5Sb1.5Te3 alloys, using water atomization to control its microstructure and improve thermoelectric performance by optimizing its initial powder size. All the water atomized powders were sieved with different aperture sizes, of 32–75 μm, 75–125 μm, 125–200 μm, and <200 μm, and subsequently consolidated using hot pressing at 490 °C. The grain sizes were found to increase with increasing powder particle size, which also increased carrier mobility due to improved carrier transport. The maximum electrical conductivity of 1457.33 Ω−1 cm−1 was obtained for the 125–200 μm samples due to their large grain sizes and subsequent high mobility. The Seebeck coefficient slightly increased with decreasing particle size due to scattering of carriers at fine grain boundaries. The higher power factor values of 4.20, 4.22 × 10−3 W/mk2 were, respectively, obtained for large powder specimens, such as 125–200 μm and 75–125 μm, due to their higher electrical conductivity. In addition, thermal conductivity increased with increasing particle size due to the improvement in carriers and phonons transport. The 75–125 μm powder specimen exhibited a relatively high thermoelectric figure of merit, ZT of 1.257 due to this higher electric conductivity.