As layered materials, transition metal dichalcogenides (TMDCs) are promising two-dimensional (2D) materials. Interestingly, the characteristics of these materials are transformed from bulk to monolayer. The atomically thin TMDC materials can be a good alternative to group III–V and graphene because of their emerging tunable electrical, optical, and magnetic properties. Although 2D monolayers from natural TMDC materials exhibit the purest form, they have intrinsic defects that limit their application. However, the synthesis of TMDC materials using the existing fabrication tools and techniques is also not immune to defects. Additionally, it is difficult to synthesize wafer-scale TMDC materials for a multitude of factors influencing grain growth mechanisms. While defect engineering techniques may reduce the percentage of defects, the available methods have constraints for healing defects at the desired level. Thus, this holistic review of 2D TMDC materials encapsulates the fundamental structure of TMDC materials, including different types of defects, named zero-dimensional (0D), one-dimensional (1D), and two-dimensional (2D). Moreover, the existing defect engineering methods that relate to both formation of and reduction in defects have been discussed. Finally, an attempt has been made to correlate the impact of defects and the properties of these TMDC materials.