Antimony telluride (Sb2Te3) nanoparticles of different sizes were fabricated by mechanical alloying (MA) of elemental Sb and Te powers for different durations. The powder nanostructures were pelletized, annealed in Ar ambient, and characterized by XRD, FESEM, TEM to study the effect of milling time and thermal treatment on particle size, grain growth, and crystallinity. The annealed and unannealed pelletized nanostructures were analyzed in a PPMS to study the effect of grain growth on their electrical and thermoelectric properties. Room temperature electrical conductivity of the p-type semiconductor nanostructures improved significantly (from ∼103 to ∼ 105 mho/m) due to thermal annealing and results in the considerable improvement in thermoelectric figure of merit (ZT). Thermal annealing-induced grain growth also transforms the semiconducting nature of the sample to metallic. The reduced thermal conductivity of the nanostructures with reduced grain size improves the ZT. The temperature-dependent Lorenz number (Leffective) is used to find the electronic contribution of total thermal conductivity, and it is explained by the non-parabolic Kane model.