Bulk nanocomposites of (Bi0.2Sb0.8)2Te3 and (Bi0.95Sb0.05)2(Te0.95Se0.05)3 containing MoS2 nano-inclusions were obtained by mechanical alloying and hot extrusion. The nano-inclusions are observed to decorate the grain boundaries of the matrix, leading to a significant reduction of average grain size and crystallite size compared to those of the conventional single phase alloy. Consequently, the thermal conductivity of these nanocomposites also decreases (~1.4W/m·K at 450K for 0.4wt.% MoS2) when compared to the conventional alloy (~1.8W/m·K). The structural changes in the nanocomposites obtained by mechanical spectroscopy in the temperature range 293–540K show an increase of the internal friction accompanied by a systematic reduction of its activation energy with an increase in MoS2 content.