In order to provide increasingly large amounts of electrical power to space and terrestrial systems with a sufficient reliability at a reasonable cost, thermoelectric energy conversion system by using Functionally Graded Material (FGM) compliant pads has been focused. To achieve high thermal energy density in thermoelectric (TE) power conversion systems, conductively coupling the TE module to the hot and cold heat exchangers is the most effective configuration. This is accomplished by two sets of FGM compliant pads. This design strategy provides (1) a high flux, direct conduction path to heat source and heat sink, (2) the structural flexibility to protect the cell from high stress due to thermal expansion, (3) an extended durability by a simple FGM structure, and (4) manufacturing cost reduction by spark plasma sintering. High thermal energy density of more than twice as much as conventional conduction coupling TE generator is expected. TE energy conversion systems combined with FGM compliant pads for space and terrestrial design options are proposed in this paper. (C) 2002 International Astronautical Federation. Published by Elsevier Science Ltd. All rights reserved.