As a lead-free material, GeTe has drawn growing attention in thermoelectrics, and a figure of merit (ZT) close to unity was previously obtained via traditional doping/alloying, largely through hole carrier concentration tuning. In this report, we show that a remarkably high ZT of ∼1.9 can be achieved at 773 K in Ge0.87Pb0.13Te upon the introduction of 3 mol % Bi2Te3. Bismuth telluride promotes the solubility of PbTe in the GeTe matrix, thus leading to a significantly reduced thermal conductivity. At the same time, it enhances the thermopower by activating a much higher fraction of charge transport from the highly degenerate Σ valence band, as evidenced by density functional theory calculations. These mechanisms are incorporated and discussed in a three-band (L + Σ + C) model and are found to explain the experimental results well. Analysis of the detailed microstructure (including rhombohedral twin structures) in Ge0.87Pb0.13Te + 3 mol % Bi2Te3 was carried out using transmission electron microscopy and crystallographic group theory. The complex microstructure explains the reduced lattice thermal conductivity and electrical conductivity as well.