The influence of nano dispersion on the thermoelectric properties of Bi2Te3 was actively investigating to wide-spread thermoelectric applications. Herein this report, we have systematically controlled the microstructure of Bi0.5Sb1.5Te3 (BST) alloys through the incorporation of carbon nanofiber (CNF), and studied their effect on thermoelectric properties, and mechanical properties. The BST/x-CNF (x-0, 0.05, 0.1, 0.2 wt.%) composites powder was fabricated using high energy ball milling, and subsequently consolidated the powder using spark plasma sintering. The identification of CNF in bulk composites was analyzed in Raman spectroscopy and corresponding CNF peaks were recognized. The BST matrix grain size was greatly reduced with CNF dispersion and consistently decreased along CNF percentage. The electrical conductivity was reduced and Seebeck coefficient varied in small-scale by embedding CNF. The thermal conductivity was progressively diminished, obtained lattice thermal conductivity was lowest compared to bare sample due to induced phonon scattering at interfaces of secondary phases as well as highly dense fine grain boundaries. The peak ZT of 0.95 achieved for 0.1 wt.% dispersed BST/CNF composites. The Vickers hardness value of 101.8 Hv was obtained for the BST/CNF composites