Solid-state thermoelectric technology, interconverting heat to electrical energy, offers a promising solution for relaxing global energy problems. A high dimensionless figure of merit ZT is desirable for high-efficiency thermoelectric power generation. To date, thermoelectric materials research has focused on increasing the material's ZT. Here we first fabricated phase-separated Sn1-xPbxSe materials by hydrothermal synthesis. We demonstrate that the simultaneous optimization of the power factor and significant reduction in thermal conductivity can be achieved in the phase-separated Sn1-xPbxSe material. The introduction of the PbSe phase contributes to improvement of the electrical conductivity and power factor of the SnSe phase. Meanwhile, nanoscale precipitates and mesoscale grains define all-scale hierarchical architectures to scattering phonons, leading to low lattice thermal conductivity. These two favorable factors lead to remarkably high thermoelectric performance with ZT ∼ 1.7 at 873 K in polycrystalline SnSe + 1% PbSe along the pressing direction, which is a record-high ZT for SnSe polycrystals. These findings highlight the prospects of realizing highly effective solid-state thermoelectric devices.