High fracture toughness, low thermal conductivity, and thermal expansion coefficient (TEC) matching substrate are essential for thermal barrier coatings (TBCs) and abradable seal coatings (ASCs). In this work, TmNbO₄/Tm₃NbO₇ composites are designed and synthesized to increase their fracture toughness (K_IC) and thermal insulation performance. Compared with those of TmNbO₄ (K_IC = 2.2±0.1 MPa·m^1/2) and Tm₃NbO₇ (K_IC = 1.7±0.2 MPa·m^1/2), the increments in fracture toughness are as high as 50.0% and 91.1%, respectively. The highest toughness reaches 3.3±0.4 MPa·m^1/2, which is attributed to the superior combination of grains between TmNbO₄ and Tm₃NbO₇, as well as the simultaneous effects of microcracks and crack bridging and bifurcation. Accurate estimation of the effect of the interfacial thermal resistance on the thermal conductivity at low temperatures was achieved using the minimum interfacial thermal resistance model. A novel method is proposed to inhibit radiative heat transfer by utilizing oxides with glass-like thermal conductivity to suppress thermal radiation. Consequently, the TmNbO₄/Tm₃NbO₇ composite maintains a low thermal conductivity (1.19–2.02 W·m⁻¹·K⁻¹) at 1000 °C. The high TECs (10.4×10⁻⁶–11.8×10⁻⁶·K⁻¹ at 1500 °C) and excellent high-temperature stability ensure that the designed TmNbO₄/Tm₃NbO₇ composites can be used at temperatures reaching 1500 °C. Accordingly, simultaneous enhancement of fracture toughness and thermal insulation in TmNbO₄/Tm₃NbO₇ composites is effective, and the revealed mechanisms are useful for various materials.