Phase immiscibility in PbTe–based thermoelectric materials is an effective means of top-down synthesis of nanostructured composites exhibiting low lattice thermal conductivities. PbTe1-x Sx thermoelectric materials can be synthesized as metastable solid solution alloys through rapid quenching. Subsequent post-annealing induces phase separation at the nanometer scale, producing nanostructures that increase phonon scattering and reduce lattice thermal conductivity. However, there has yet to be any study investigating in detail the local chemical structure of both the solid solution and nanostructured variants of this material system. Herein, quenched and annealed (i.e., solid solution and phase-separated) samples of PbTe–PbS are analyzed by in situ high-resolution synchrotron powder X-ray diffraction, solid-state 125Te nuclear magnetic resonance (NMR), and infrared (IR) spectroscopy analysis. For high concentrations of PbS in PbTe, e.g., x >16%, NMR and IR analyses reveal that rapidly quenched samples exhibit incipient phase separation that is not detected by state-of-the-art synchrotron X-ray diffraction, providing an example of a PbTe thermoelectric “alloy” that is in fact phase inhomogeneous. Thermally-induced PbS phase separation in PbTe–PbS occurs close to 200 °C for all compositions studied, and the solubility of the PbS phase in PbTe at elevated temperatures >500 °C is reported. The findings of this study suggest that there may be a large number of thermoelectric alloy systems that are phase inhomogeneous or nanostructured despite adherence to Vegard's Law of alloys, highlighting the importance of careful chemical characterization to differentiate between thermoelectric alloys and composites.