This work demonstrates the enhancement of brake thermal efficiency (BTE) of an advanced, turbocharged, production-intent 2.2 L diesel engine with a thermoelectric waste heat recovery system (TEG-WHR). The integrated engine model with the TEG is developed using 0D/1D software. Experimental data from the corrugated fin TEG under fin pitch = 1.0–2.0 mm, inlet gas temperatures (200–300 °C), and mass flow rates (5.0–15.0 g/s) are used for validating the model. The TEG model can reproduce measured pressure drop, heat transfer, and thermal performance characteristics. A 1-cylinder engine model parented from the advanced turbocharged diesel engine is developed. Under motoring and firing conditions, measured exhaust pressure, temperature, velocity, mass flow rate, and enthalpy are validated under various valve timings. Finally, the 3-layer TEG model is connected to the 4-cylinder engine to maximize its performance under a highly efficient (peak BTE) operating condition at 2250 RPM. Optimal size and thermoelectric module arrangement of the TEG system in the engine system considering a tradeoff between the TEG generated electrical power and engine pumping losses are suggested. The effective power of 1.1 kW and 1.1 % BTE improvement are obtained from the 3-sheet TEG system. As a result, a 49.9 % engine BTE is demonstrated without brake power loss.