Abstract: Diffusion and occupancy of magnetic atoms in van der Waals (VDW) layered materials have significant impact on applications such as energy storage, thermoelectrics, catalysis, and topological phenomena. However, due to the weak VDW bonding, most research focus on in-plane diffusion within the VDW gap, while out-of-plane diffusion has rarely been reported. Here, to investigate out-of-plane diffusion in VDW-layered Bi2Te3-based alloys, a Ni/Bi0.5Sb1.5Te3 heterointerface is synthesized by depositing magnetic Ni metal on a mechanically exfoliated Bi0.5Sb1.5Te3 (0001) substrate. Diffusion of Ni atoms across the Bi0.5Sb1.5Te3 quintuple layers is directly observed at elevated temperatures using spherical-aberration-corrected scanning transmission electron microscopy (STEM). Density functional theory calculations demonstrate that the diffusion energy barrier of Ni atoms is only 0.31-0.45 eV when they diffuse through Te-3(Bi, Sb)(3) octahedron chains. Atomic-resolution in situ STEM reveals that the distortion of the Te-3(Bi, Sb)(3) octahedron, induced by the Ni occupancy, drives the formation of coherent NiM (M = Bi, Sb, Te) at the heterointerfaces. This work can lead to new strategies to design novel thermoelectric and topological materials by introducing magnetic dopants to VDW-layered materials.