PbTe-based thermoelectric materials are some of the most promising for converting heat into electricity, but their n-type versions still lag in performance the p-type ones. Here, we introduce midgap states and nanoscale precipitates using Ga-doping and GeTe-alloying to considerably improve the performance of n-type PbTe. The GeTe alloying significantly enlarges the energy band gap of PbTe and subsequent Ga doping introduces special midgap states that lead to an increased density of states (DOS) effective mass and enhanced Seebeck coefficients. Moreover, the nucleated Ga2Te3 nanoscale precipitates and off-center discordant Ge atoms in the PbTe matrix cause intense phonon scattering, strongly reducing the thermal conductivity (similar to 0.65 W m(-1) K-1 at 623 K). As a result, a high room-temperature thermoelectric figure of merit ZT similar to 0.59 and a peak ZT(max) of similar to 1.47 at 673 K were obtained for the Pb0.98Ga0.02Te-5%GeTe. The ZT(avg) value that is most relevant for devices is similar to 1.27 from 400 to 773 K, the highest recorded value for n-type PbTe.