A new progressive advanced approach (Loop thermosyphon Thermoelectric Power generation System) is suggested to optimize heat recovery ability from vehicle exhaust gas. As an initial look at device feasibility, the present new TE system adopted the loop thermosyphon as a cooling heat exchanger. The TE system with loop thermosyphon was investigated in terms of working fluids, instability of system, amount of working fluid, and so on. Basically, the present experimental works have been focused on finding the optimum working condition of the system to improve thermoelectric power output and to obtain stable power generation to operate hybrid vehicles. The present experimental results with the loop thermosyphon TE module shows possibilities as an improved TE system for future thermoelectric hybrid vehicles.