Abstract: Thermoelectric technology offers the possibility of reliable methods for converting waste heat into useful electricity using the Seebeck effect, and for accurate cooling using the Peltier effect. This paper focuses on the fundamental physics and recent development of traditional thermoelectric materials, i.e. narrow band-gap semiconductors, including the criterion for a good thermoelectric material, the physical mechanisms and methods for improving the Seebeck coefficient and electrical conductivity, and the approaches for reducing thermal conductivity. The physics in the development of phonon-glass-electron-crystal materials and low-dimension thermoelectric materials, recent hot topics in the study of thermoelectric compounds, will also be discussed. Finally, a brief introduction to recent advances in non-traditional thermoelectric materials research will be given.