The powder metallurgical fabrication of Bi₂Te₃ thermoelectric materials using mechanical grinding process has been studied with specific interest to control the microstructure and increase the figure of merit. The figure of merit of sintered bodies of milled Bi₂Te₃ powder decreased with increasing milling time, mainly due to the increase of the electrical resistivity with milling time. It has been known that microstructure refinement by the simple milling process was not effective to improve the thermoelectric properties of Bi₂Te₃ thermoelectric materials. Bi₂Te₃ sintered bodies with addition of nano size ZrO₂ particles from 1vol.% to 4vol.% showed higher figure of merit than that without addition of nano size ZrO₂ particles. Especially, figure of merit of Bi₂Te₃ sintered bodies with addition of 1vol.% ZrO₂ increased 1.6 times compared to the value of the specimen without addition of ZrO₂. Addition of nano size second particles to thermoelectric materials by mechanical grinding process seemed to be useful method to increase figure of merit.