Bulk AgBiS2 crystallizes in a trigonal crystal structure (space group, P (3) over bar m1) at room temperature, which transforms to a cation disordered rock salt structure (space group, Fm (3) over barm) at similar to 473 K. Surprisingly, at room temperature, a solution-grown nanocrystal of AgBiS2 crystallizes in a metastable Ag/Bi ordered cubic structure, which transforms to a thermodynamically stable disorded cubic structure at 610 K. Moreover, the order-disorder transition in nanocrystalline AgBiS2 is associated with an unusual change in thermopower. Here, we shed light on the origin of a order-disorder phase transition and the associated anomalous change of thermopower in AgBiS2 nanocrystals by using a combined experimental, density functional theory based first-principles calculation and ab initio molecular dynamics simulations. Positron-annilation spectroscopy indicates the presence of higher numbers of Ag vacancies in the nanocrystal compared to that of the bulk cubic counterpart at room temperature. Furthermore, temperature-dependent two-detector coincidence Doppler broadening spectroscopy and Doppler broadening of the annihilation radiation (S parameter) indicate that the Ag vacancy concentration increases abruptly during the order disorder transition in nanocrystalline AgBiS2. At high temperature, a Ag atom shuttles between the vacancy and interstitial sites to form a locally disordered cation sublattice in the nanocrystal, which is facilitated by the formation of more Ag vacancies during the phase transition. This process increases the entropy of the system at higher vacancy concentration, which, in turn, results in the unusual rise in thermopower.