The p-type (Bi0.2Sb0.8)2Te3 powders were mechanically alloyed and hot pressed at 500 degrees C for 30 minutes with dispersion of Si nanopowders up to 3 vol%. The thermal conductivity of the (Bi0.2Sb0.8)2Te3 nanocomposite was substantially reduced with dispersion of 0.3-3 vol% Si nanopowders due to the enhanced phonon scattering. The maximum dimensionless figure-of-merit of 1.32 at 75 degrees C was obtained for the (Bi0.2Sb0.8)2Te3 nanocomposite dispersed with 1 vol% Si nanopowders, compared to 1.08 of the specimen without Si nanopowder dispersion.