Molybdenum disulfide (MoS2), a 2D layered material has been recognised as a new paradigm in the area of materials science due to its graphene like structure. Herein, we prepared functionalized MoS2 nanosheets through one-pot hydrothermal technique using cationic surfactant, cetyltrimethylammonium bromide (CTAB). The surfactant functionalized MoS2 (CTAB-MoS2) was subsequently dispersed in epoxy matrix at the loading level of 0.1-0.5 wt% to investigate the reinforcing competence of MoS2 on the mechanical and thermal properties of the composites. Fourier transform infrared spectroscopy, X-ray diffraction and field emission scanning electron microscopy (FE-SEM) were used to characterize the microstructure and morphology of the hydrothermally prepared pristine MoS2 and CTAB-MoS2. Dynamic mechanical and tensile properties were studied to comprehend the effect of functionalized MoS2 on the mechanical properties of the composites. At 0.2 wt% loading, the tensile strength and Young's modulus was improved by similar to 23 and 26.7%, respectively, while similar to 83% improvement in storage modulus was recorded. Thermal stability of all the studied specimens were compared by selecting the temperatures at 10 and 50% weight losses which showed small decrease in onset degradation temperature.