In this study, the effects of Bi content and temperature on the mechanical properties of Fe-Bi nanocomposites were investigated using molecular dynamics simulation. The research reveals that the nanocomposite's shear strength reaches a peak of 3.785 GPa at a Bi content of 0.15%, attributed to the impediment of dislocation movement by twin boundaries during shearing, resulting in a dynamic "Hall-Petch" effect and exceptional shear performance of the material. The abundant twinning induced around Bi phase inclusions introduces orientational disparities within the crystal, leading to grain misalignments, with dislocations in the grains slipping near the twin boundaries. In the nanocomposites, <100>dislocations merely act as initial sites for reactions, reducing their impact on the material's strength and fracture behavior. The maximum stress decreases with increasing temperature while the magnitude of atomic transformations increases. The proportion of atoms at grain boundaries is higher at higher temperatures, and the arrangement of atoms at grain boundaries is more complex. At a temperature of 100K, the dislocation density is highest with the smallest variation, forming a reinforced region within the material. The above results have significant implications for the design of environmentally friendly Bi-containing free-cutting steels.