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Bandgap engineering plays a critical role in optimizing the electrical, optical and (photo)-electrochemical applications of semiconductors. Alloying has been a historically successful way of tuning bandgaps by making solid solutions of two isovalent semiconductors. In this work, a novel form of bandgap engineering involving alloying non-isovalent cations in a 2D transition metal dichalcogenide (TMDC) is presented. By alloying semiconducting MoSe2 with metallic NbSe2, two structural phases of Mo0.5Nb0.5Se2, the 1T and 2H phases, are produced each with emergent electronic structure. At room temperature, it is observed that the 1T and 2H phases are semiconducting and metallic, respectively. For the 1T structure, scanning tunneling microscopy/spectroscopy (STM/STS) is used to measure band gaps in the range of 0.42–0.58 at 77 K. Electron diffraction patterns of the 1T structure obtained at room temperature show the presence of a nearly commensurate charge density wave (NCCDW) phase with periodic lattice distortions that result in an uncommon 4 × 4 supercell, rotated approximately 4° from the lattice. Density-functional-theory calculations confirm that local distortions, such as those in a NCCDW, can open up a band gap in 1T-Mo0.5Nb0.5Se2, but not in the 2H phase. This work expands the boundaries of alloy-based bandgap engineering by introducing a novel technique that facilitates CDW phases through alloying.