Thermoelectric (TE) materials convert heat directly into electricity, and the efficiency of TE materials is measured by the figure of merit (ZT). This chapter explores how defect engineering improves thermoelectric performance by tuning electrical conductivity, Seebeck coefficient, and lattice thermal conductivity across inorganic, polymers, perovskite, and hybrid materials, etc. Defects such as vacancies, dislocations, grain boundaries, and nano-precipitates play a crucial role in tailoring the electronic band structure, carrier mobility, and phonon scattering mechanisms, thereby enhancing both the thermoelectric performance (high ZT) and mechanical stability of materials. This chapter also highlights recent advances in computational modeling and high-resolution characterization techniques—such as Transmission Electron Microscopy (TEM), synchrotron-based X-ray analysis, and positron annihilation spectroscopy—which provide valuable insights into how defects alter local atomic structures and electronic states. The discussion concludes with future perspectives that emphasize the integration of multiscale modeling, in-situ experimental studies, and data-driven materials design to develop efficient, durable, and sustainable thermoelectric materials for waste-heat recovery applications.