Thermoelectric "waste heat-to-electrical energy" generation is an efficient and attractive option for robust and environmentally friendly renewable energy production. Simultaneous tailoring of interdependent thermoelectric parameters, i.e. electrical conductivity, thermopower and thermal conductivity, to improve the thermoelectric figure of merit is the utmost challenge in this field. Another important aspect is to develop high performance materials based on cheap and earth abundant materials. We have chosen AgSbSe2, a homologue of AgSbTe2 containing earth abundant selenium, as a model system for thermoelectric investigation due to its low thermal conductivity and favourable valence band structure. Herein, we show that by integrating different but synergistic concepts: (a) carrier engineering, (b) second phase endotaxial nanostructuring and (c) bond anharmonicity, we can achieve a maximum ZT of ∼1.1 at 635 K in AgSbSe2-ZnSe (2 mol%), which is significantly higher than that of pristine AgSbSe2. The above system therefore offers promise to replace traditional metal tellurides for mid-temperature power generation. We demonstrate a design strategy which provides simultaneous enhancement of electrical transport through optimized doping, superior thermopower by the convergence of degenerate valence bands, and glass-like thermal conductivity due to the effective scattering of phonons by nanostructuring, bond anharmonicity and a disordered cation sublattice. © 2014 The Royal Society of Chemistry.