Selective laser melting a laser powder bed fusion technique, enables the layer-by-layer fabrication of complex metal components by locally melting the powder feedstock. For automotive and aerospace industries, where weight reduction and high thermal efficiency are critical, SLM offers an opportunity to replace conventional monolithic alloys with advanced materials. Functionally Graded Materials provide spatial variation in properties, allowing optimization of both structural integrity and thermal performance. However, limited studies have addressed the combined mechanical–thermal characterization of SLM-produced AlSi10Mg FGMs for heat sink applications. In this study, functionally graded AlSi10Mg heat sink components were fabricated via SLM using optimized parameters 320 W laser power, 1200 mm/s scan speed, 30 µm layer thickness, and 120 µm hatching distance to minimize porosity and defect formation. The fabricated components underwent microstructural analysis using scanning electron microscopy and microhardness testing, achieving 121 ± 5 HV with a fine, uniform microstructure and negligible defects. Thermal performance was evaluated using ANSYS simulations for both conventional aluminium and the SLM-produced FGM AlSi10Mg under steady-state and forced convection conditions. Results showed that FGM AlSi10Mg heat sinks achieved comparable maximum and minimum operating temperatures to conventional aluminium while offering improved thermal uniformity and reduced localized hotspots. The integration of the FGM concept into SLM processing demonstrates a novel pathway for producing lightweight, high-performance heat sinks with tailored properties, bridging the gap between structural strength and efficient heat dissipation in demanding engineering applications.