We report a new 'spark erosion' technique for producing high-quality thermoelectric nanoparticles at a remarkably high rate and with enhanced thermoelectric properties. The technique was utilized to synthesize p-type Bi(0.5)Sb(1.5)Te(3) nanoparticles with a production rate as high as 135 g h(-1), using a relatively small laboratory apparatus and low energy consumption. The compacted nanocomposite samples made from these nanoparticles exhibit a well-defined, 20-50 nm size nanograin microstructure, and show an enhanced figure of merit, ZT, of 1.36 at 360 K. Such a technique is essential for providing inexpensive, oxidation-free nanoparticles which are required for the fabrication of high performance thermoelectric devices for power generation from waste heat, and for refrigeration.