Transmission electron microscopy studies show that a PbTe-BaTe bulk thermoelectric system represents the coexistence of solid solution and nanoscale BaTe precipitates. The observed significant reduction in the thermal conductivity is attributed to the enhanced phonon scattering by the combination of substitutional point defects in the solid solution and the presence of high spatial density of nanoscale precipitates. In order to differentiate the role of nanoscale precipitates and point defects in reducing lattice thermal conductivity, a modified Callaway model is proposed, which highlights the contribution of point defect scattering due to solid solution in addition to that of other relevant microstructural constituents. Calculations indicate that in addition to a 60% reduction in lattice thermal conductivity by nanostructures, point defects are responsible for about 20% more reduction and the remaining reduction is contributed by the collective of dislocation and strain scattering. These results underscore the need for tailoring integrated length-scales for enhanced heat-carrying phonon scattering in high performance thermoelectrics.