It is critical to understand the transformation mechanisms in layered metal chalcogenides to enable controlled synthesis and processing. Here, we develop an alumina encapsulation layer-based in situ transmission electron microscopy (TEM) setup that enables the investigation of melting, crystallization, and alloying of nanoscale bismuth telluride platelets while limiting sublimation in the high-vacuum TEM environment. Heating alumina-encapsulated platelets to 700 °C in situ resulted in melting that initiated at edge planes and proceeded via the movement of a sharp interface. The encapsulated melt was then cooled to induce solidification, with individual nuclei growing to form single crystals with the same basal plane orientation as the original platelet and nonequilibrium crystal shapes imposed by the encapsulation layer. Finally, heating platelets in the presence of antimony caused alloying and lattice strain, along with heterogeneous phase formation. These findings provide new insight into important transformation processes in layered metal chalcogenide materials.