This study examines the thermoelectric behavior of composites containing hydrothermally processed tellurium-coated bismuth particles of various sizes. Since only a very thin layer of Bi2Te3 forms on the particle surface, the high-pressure compacted composite is still dominated by bismuth as the main ingredient (∼96% Bi). Thermoelectric figure of merit ZT values are derived from measurements of thermal conductivity, electrical resistivity, and Seebeck coefficient. As expected, a ZT value almost three times higher than that of bismuth is found. This enhancement appears to be caused mainly by lowered thermal conductivity due to the significant number of grain boundaries, short phonon mean free path in the coating layers, and lattice mismatch.