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We investigated the effect of the Ce substitution in Bi2Te3 on its electronic, magnetic, and thermoelectric properties in first-principles using the precise full-potential linearized augmented plane-wave (FLAPW) method. Results revealed that CeBiTe3 is a magnetic semiconductor with a very narrow energy band gap in the spin-polarized phase within GGA+U. The calculation of thermoelectric coefficients, which is determined by utilizing the Boltzmann's equation in a constant relaxation-time approach using the FLAPW wave-functions, shows that the Ce substitution causes a reduction of the thermoelectric power, as a result of the change in Seebeck coefficient and electrical conductivity due to the strongly localized 4f bands and the reduced band gap. The maximum figure of merit ZT is found to be about 0.29 at 450 K, which is in good agreement with the experiment.