We explored the effect of Cd substitution on the thermoelectric properties of PbTe in an effort to test a theoretical hypothesis that Cd atoms on Pb sites of the rock salt lattice can increase the Seebeck coefficient via the formation of a resonance level in the density of states near the Fermi energy. We find that the solubility of Cd is less than previously reported, and CdTe precipitation occurs to create nanostructuring, which strongly suppresses the lattice thermal conductivity. We present detailed characterization including structural and spectroscopic data, transmission electron microscopy, and thermoelectric transport properties of samples of PbTe-x% CdTe-0.055% Pbl(2) (x = 1, 3, 5, 7, 10), PbTe-1% CdTe-y% Pbl(2) (y = 0.03, 0.045, 0.055, 0.08, 0.1, 0.2), PbTe-5% CdTe-y% Pbl(2) (y = 0.01, 0.03, 0.055, 0.08), and PbTe-1% CdTe-z% Sb (z = 0.3, 0.5, 1, 1.5, 2, 3, 4, 5, 6). All samples follow the Pisarenko relationship, and no enhancement of the Seebeck coefficient was observed that could be attributed to a resonance level or a distortion in the density of states. A maximum ZT of similar to 1.2 at similar to 720 K was achieved for the PbTe-1% CdTe-0.055% Pbl(2) sample arising from a high power factor of similar to 17 mu W/(cm K-2) and a very low lattice thermal conductivity of similar to 0.5 W/(m K) at similar to 720 K.