The structural and thermoelectric properties of the AgSbTe2-SnTe quaternary system were studied. Powder averaged x-ray diffraction of Ag0.85SnSb1.15Te3 indicates a cubic NaCl-type structure in contrast with the single crystal refinements, which point towards tetragonal symmetry. Furthermore, high-resolution electron microscopy imaging revealed the system to be a nano-composite formed by thermodynamically driven compositional fluctuations rather than a solid solution as it was viewed in the past. The lattice thermal conductivity attains very low values, which is in accord with recent theories on thermal transport in heterogeneous systems. The charge transport properties of the system exhibit a rich physical behavior highlighted in the coexistence of an almost metallic carrier concentration (∼5×1021 cm−3) with a large thermoelectric power response of ∼160 μV/K at 650 K. This is attributed to a heavy hole effective mass that is almost six times that of the electron rest mass.