Phase pure and 25 % Sb incorporated Bi2Te3 compounds with a rhombohedral crystal structure are synthesized by mechanical alloying the stoichiometric mixtures of elemental powders within 3 h under an inert atmosphere. The structure and microstructure of the synthesized samples are revealed by analyzing XRD patterns with Rietveld refinement, FESEM, HRTEM images, and EDX spectra. The increment of lattice parameter ‘c’ with increasing milling time is associated with the increased [Bi/SbTe] type antisite defects. Optical bandgaps of the pure and Sb-alloyed Bi2Te3 samples of different sizes are determined from the FTIR spectra. The transition of undoped n-type to Sb-alloyed p-type semiconducting nature is revealed from the photo responses of the samples. The ac electrical conductivity as well as complex impedance spectra in the temperature range 303–403 K reveal the semi-metallic, non-Debye type behavior of the samples and temperature-dependent relaxation phenomena. The change in electrical conductivity and the corresponding activation energies due to Sb alloying and for different grain sizes are explained in terms of antisite defects and porosity of materials. The temperature variation of the frequency exponent has been demonstrated with the small polaron hopping transaction. The Mott VRH model is used to explain the electrical conduction mechanism of the synthesized samples. The variation of Vickers microhardness with the grain size of milled samples corroborates well with the Hall-Petch relation. The normal indentation size effect (ISE) is depicted from Meyer's law. The photocatalytic activity of 10 h milled Sb-alloyed sample to degrade Rhodamine B cationic dye in wastewater is ∼ 91 %. The correlations of electrical and mechanical properties with the photocatalytic activity of the samples have been established.