Altermagnets (AMs) are a new class of magnetic materials that combine the beneficial spintronics properties of ferromagnets and antiferromagnets, garnering significant attention recently. Here, we have identified altermagnetism in a layered intercalated transition metal diselenide, CoNb$_4$Se$_8$, which crystallizes with an ordered sublattice of intercalated Co atoms between NbSe$_2$ layers. Single crystals are synthesized, and the structural characterizations are performed using single crystal diffraction and scanning tunneling microscopy. Magnetic measurements reveal easy-axis antiferromagnetism below 168 K. Density functional theory (DFT) calculations indicate that A-type antiferromagnetic ordering with easy-axis spin direction is the ground state, which is verified through single crystal neutron diffraction experiments. Electronic band structure calculations in this magnetic state display spin-split bands, confirming altermagnetism in this compound. The layered structure of CoNb$_4$Se$_8$ presents a promising platform for testing various predicted properties associated with altermagnetism.