Utilizing alternative propellants has been recognized as a strategy to reduce the total cost of propellants in electric propulsion-based missions. The aim of this study is to quantify the Hall effect thruster (HET) performance and operating characteristics using a Kr–Ar mixture to enable mission designers to evaluate the impact on mission and spacecraft design. We present the performance and plume plasma properties of the P5 5 kW-class HET operated with a Kr–Ar mixture with Ar volumetric flow rate fractions from 0 to 100%. The thruster is characterized at discharge power levels of 2.6 kW and 4.1 kW at constant discharge current and voltage over the range of Ar fractions. Despite higher ionization energy and lower mass of Ar, the thruster exhibited a similar level of thrust within 2% when comparing the pure Kr and 26%-Ar mixture cases. The derived ion energy distribution functions and analytical modeling suggest that the characteristic length for the ionization region is extended as the Ar fraction increases. The increased residence time of Kr at the extended ionization region and background energetic electrons from the ionized Ar neutrals are considered to cause this enhanced ionization of the injected Kr neutrals. This leads to a 6% higher Kr ion density at the 26%-Ar case even at the 16% less injected Kr neutral density than in the pure Kr case. The enhanced Kr ionization and generated Ar ions in the 26%-Ar case consequently led to a comparable thrust with that of the pure Kr case. The study indicates that mixing Ar with approximately 26% volumetrically with Kr can provide a similar or even higher thrust performance at the same discharge power. This will be particularly advantageous for various space missions that require high impulses by reducing the total cost of the propellant.