High-resolution transmission electron microscopy (HRTEM) observations of mechanically alloyed powders and bulk extruded alloys give experimental evidence of nanosized grains in bismuth telluride-based materials. In this study we combine HRTEM observations and x-ray diffraction (XRD) measurements, of both mechanically alloyed powders and extruded samples, with mechanical spectroscopy (MS) of extruded rods. Both HRTEM and XRD show that nanostructures with an average grain size near 25 nm can be achieved within 2 h of mechanical alloying from pure elements in an attritor-type milling machine. Residual strain orthogonal to the c-axis of powder nanoparticles has been evaluated at about 1.2% by XRD peak broadening. In contrast, XRD has been found unreliable for evaluation of grain size in highly textured extruded materials for which diffraction conditions are similar to those of single crystals, while MS appears promising for study of bulk extruded samples. Nanostructured extruded alloys at room temperature exhibit an internal friction (IF) background that is one order of magnitude higher than that of conventional zone-melted material with a grain size of several millimeters. IF as a function of sample temperature gives activation energies that are also different between bulk materials having nano-and millimeter-size grains, a result that is attributed to different creep mechanisms. Nanograin size, as well as orientation and volumetric proportion, provide valuable information for optimization of technological parameters of thermoelectric alloys and should be carefully cross-examined by various independent methods.