The n-type Fe 0:98 Co 0:02 Si 2 compacts with Y 2 O 3 (1-6 mass%) dispersion were synthesized by mechanical alloying with Y 2 O 3 powder and subsequent hot pressing. The effects of Y 2 O 3 addition on the thermoelectric properties of the -FeSi 2 were investigated. The microstructures of the hot pressed samples were observed by transmission electron microscopy (TEM). The TEM observation showed that the fine Y 2 O 3 particles around 10 nm in size were dispersed in the phase matrix by mechanical alloying, resulting in a significant reduction in the thermal conductivity due to enhancing phonon scattering. The Seebeck coefficient was also enhanced by Y 2 O 3 addition especially below 800 K, corresponding to the extrinsic conductive region of the -FeSi 2 . Consequently, the figure of merit was significantly improved by 2 mass% Y 2 O 3 addition. The chemical composition of these samples with Y 2 O 3 addition was examined by the energy dispersive X-ray spectroscopy (EDX). The EDX analysis revealed that the added Y 2 O 3 was partially decomposed and a small amount of Y was dissolved in the phase matrix. Based on this fact, the enhancement of the Seebeck coefficient caused by Y 2 O 3 addition is considered to be due to reduction in carrier concentration resulted from this Y solution as a p-type dopant in the phase matrix, and the behavior of the Seebeck coefficient was found to be well consistent with that of the Y-doped samples synthesized by Y powder addition.