The full three-dimensional structure of Ag-intercalated molybdenum disulfide has been experimentally determined. The atomic pair distribution function (PDF) analysis technique has been employed because of the very limited structural coherence in this nanocrystalline material. We found that at the atomic scale, this compound can be well-described as an assembly of anionic MoS2 slabs encapsulating the Ag+ ions. Silver is found in an almost linear coordination of two sulfur atoms at 2.41 and 2.46 Å. The molybdenum atoms engage in strong metal-metal bonding giving rise to Mo-Mo zigzag chains within the MoS2 slabs. This study demonstrates the effectiveness of PDF technique in determining the structure of poorly diffracting, heavily disordered, and nanocrystalline materials. The new structural information obtained for AgxMoS2 could not have been obtained by any other currently available technique.