With a rapid developing global economy and population growth, demand for natural gas is expected to outpace supply. Current state of the art methanation catalysts like nickel-based (Ni) catalysts are susceptible to poisoning by sulfuric compounds present in the syngas. MoS2 is one of the few methanation catalysts not affected by sulfuric impurities, allowing the use of syngas feedstocks from coal gasification for direct methanation before extensive clean-up of the syngas. Increasing the number of Mo active sites is challenging since they are mostly located at the edges while the basal planes are mostly inert. In this study, we report a method of producing MoS2 with a significant amount of exposed edges (nano-flakes) which resulted in highly active MoS2 catalysts. Effects of support, Mo precursors and synthesis techniques on the formation of nano-MoS2 structure and methanation activity have been investigated. MoS2 nano-flakes can be produced from a solvothermal method or thermolysis of a thiomolydate precursor. The resulting MoS2 catalysts were tested for direct methanation of CO with H-2 to CO ratio of 1:1 and 3000 ppm of H2S under 3 MPa. X-ray absorption spectroscopy was also utilized to gain more insight into the structure of the catalysts.