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Based on a functional group composite strategy, the first Ag-containing phosphate-tellurite nonlinear optical (NLO) crystal, Ag(Te2O3)(PO4), was synthesized via a subcritical hydrothermal method. This crystal crystallizes in the noncentrosymmetric space group Pmn21, featuring a unique zigzag two-dimensional [(Te2O3)(PO4)]∞ layer. It possesses the strongest powder second-harmonic generation (SHG) response among all reported phosphate-tellurite compounds, reaching 2.1 × KH2PO4, along with a moderate birefringence of 0.045@546 nm. Theoretical calculations indicate that the TeO4 group with stereochemically active lone-pair electrons, together with AgO7 polyhedra and PO4 group, synergistically contribute to its optical properties. This functional group composite strategy not only facilitates the integration of phosphate and tellurite units with Ag+ cations but also offers a versatile route for designing NLO materials across diverse inorganic systems.