Thermoelectric generation (TEG) has its unique advantages in terms of distributed energy supply, low-grade heat recovery, and clean energy technology, but its low efficiency has constrained its application and promotion seriously. In order to obtain satisfactory efficiency and realize the adaptability to different heat sources, a novel cascaded TEG system (CTEG) is proposed. According to the temperature of heat source, three types of thermoelectric modules are used in the generator system. The module arrangement, cooling medium, and mode directly affect the performance of this whole system, since that the detailed model and CFD simulation were conducted to obtain the optimal collocation. Based on the optimization modeling, a CTEG prototype was constructed. From the experimental results, the efficiency of the CTEG achieved 5.92%, which significantly improved about 21.56% compared with the TEG which only contains one stage. Moreover, the key parameters of the system were identified. The stability and the improvement of the system were discussed comprehensively. For TEG system, CTEG increase the utilization of high-temperature heat sources, but also provides a structure for a TEG adapting to multiple temperature heat sources.