Many recent advances in thermoelectric (TE) materials are attributed to their nanoscale constituents. Determination of the nanocomposite structures has represented a major experimental and computational challenge and eluded previous attempts. Here we present the first atomically resolved structures of high performance TE material PbTe-AgSbTe2 by transmission electron microscopy imaging and density functional theory calculations. The results establish an accurate structural characterization for PbTe-AgSbTe2 and identify the interplay of electric dipolar interactions and strain fields as the driving mechanism for nanoprecipitate nucleation and aggregation.