Selenium compositional grading in CdTe-based thin-film solar cells substantively improves carrier lifetime and performance. However, where and how recombination lifetime improves has not been studied significantly. Here, we deposit a CdSexTe1−x/CdTe bilayer on MgZnO/SnO2/glass, which achieves a short-circuit current density greater than 28 mA/cm2 and carrier lifetimes as long as 10–20 ns. We analyze the grain structure, composition, and recombination through the thickness of the absorber using electron backscatter diffraction, Auger-electron spectroscopy, cathodoluminescence spectrum imaging, and time-resolved photoluminescence microscopy. Despite small CdSeTe grains near the pn-junction and significantly larger CdTe grains in the rest of the film, both time-resolved photoluminescence and cathodoluminescence reveal that the carrier lifetime in CdSeTe alloy regions is longer than in CdTe regions. The results indicate that Se both passivates grain boundaries and improves grain-interior carrier lifetime. However, these effects occur only where there is significant alloying, which is important for bandgap engineering.