A novel chemical alloying method has been developed for the fabrication of nanocrystalline thermoelectric alloys Cobalt antimonide, CoSb3, and Bismuth telluride, Bi2Te3. The method combines a solution chemical method and thermal processing under controlled heating conditions. The components have been co-precipitated from a solution and the precursor consisted of a solid solution of the different intermediate compounds with different crystallinity. Calcination and hydrogen reduction of the precursor at moderate temperature, 350oC, resulted in the alloying of these elements to obtain the nanocrystalline thermoelectric material. Crystallization of the amorphous precursor as well as the processing route has been investigated by following the changes in the chemistry of the material from the precursor to the final alloy. Detailed microstructure investigation by electron microscopy has also been presented.