We investigated the effects of Fe3O4(0 similar to 0.1 wt.%) on the thermoelectric properties of Bi1Sb4Te7.5 alloy prepared by mechanical alloying process. The Seebeck coefficient increased with Fe3O4 content, but the power factor decreased with Fe3O4 content because of the decreased electrical conductivity. The thermal conductivity decreased with Fe3O4. The carrier concentration measured by the Hall effect measurement decreased with Fe3O4. The thermal conductivity of 0.1 wt.% Fe3O4 alloy was 0.814 W/Km, 20%lower than that of Fe304 free alloy. As a result, the small addition of Fe3O4 improved the Z value owing to the decreased thermal conductivity by adding Fe3O4. The Z value of 0.01 wt.% Bi1Sb4Te7.5 alloy was 3.1 x 10(-3) /K, the highest value among the prepared alloys.