GeTe is an interesting material presenting both spontaneous polarization (ferroelectrics) and outstanding electrical conductivity (ideal for thermoelectrics). Pristine GeTe exhibits classic 71° and 109° submicron ferroelectric domains, and near unity thermoelectric figure of merit ZT at 773 K. In this work, it is demonstrated that Bi2Te3 alloying in GeTe lattice can introduce vast Ge vacancies which can further evolve into nanoscale van der Waals gaps upon proper heat treatment, and that these vacancy gaps can induce 180° nanoscale ferroelectric domain boundaries. These microstructures eventually become a hierarchical ferroelectric domain structure, with size varying from submicron to nanoscale and polarization from 71°, 109° to 180°. The establishment of hierarchical ferroelectric domain structure, together with the nanoscale Ge vacancy van der Waals gaps, has profound effects on the electrical and thermal transport properties, resulting in a striking peak thermoelectric ZT ≈ 2.4 at 773 K. These findings might provide an alternative conception for thermoelectric optimization via microstructure modulation. Nanoscale‐charged domain walls and microdomains, together with Ge van der Waals gaps in Bi2Te3 alloyed GeTe, combine to make a complex hierarchical architecture which realizes an outstanding figure of merit ZT ≈ 2.4 at 773 K via simultaneous modulation of charge carriers and phonons.