For useful thermoelectric elements, the figure of merit should be high over wide temperature range. In order to realize such a thermoelectric performance, Functionally Graded Material (FGM) approach has attracted engineers' attention. The research activities on the enhancement of thermoelectric figure of merit through FGM processing technology in Japan are reviewed in the paper. After the fundamental design guideline of FGM thermoelectric element is presented, the experimental results for several kinds of FGM approach are introduced mainly based on the FGM projects named ''Development of Energy Conversion Material though Formation of Graded Structures'' promoted by Science and Technology Agency and ''Physics and Chemistry of Functionally Graded Materials'' supported by Ministry of Education and Culture. The technological problems and future prospects are also discussed.