In this Letter, we report on the role of Se incorporation in the increased efficiency recently measured in Se alloyed cadmium telluride (CdTe) absorbers. This is done by means of density functional theory calculations following an extensive exploration of all the possible diffusion paths of Se. We identify a unique two-step mechanism that accounts for bulk diffusion of chalcogenide interstitials in CdTe, explaining the Se diffusion measured in experiments. The interaction of the diffusing interstitial with the Cd vacancy and the Te antisite is further analyzed in order to understand the passivation of these two main non-radiative recombination centers. Taking into account the approach path of Se, we identify nine complexes that present different levels of passivation. The lowest formation energy is achieved for a ⟨100⟩ Te dimer with two Se in the first neighbor shell. This defect also presents the shallowest donor character defect state due to the presence of Se. This highlights the hybrid role of Se in the mechanism of increased efficiency: it first mediates the diffusion of chalcogenide toward the non-radiative recombination centers before it leads with Te to their optimal passivation. This comprehensive insight should allow further improvements in CdTe-based technologies.