The ultrathin body of two-dimensional (2D) materials provides potential for next-generation electronics and optoelectronics. The unavoidable atomic defects substantially determine the physical properties of atomic-level thin 2D materials, thus enabling new functionalities that are impossible in three-dimensional semiconductors. Therefore, rational design of atomic defects provides an alternative approach to modulate the physical properties of 2D materials. In this review, we summarize the recent progress of defect engineering in 2D materials, particularly in device performance enhancement. Firstly, the common defects in 2D materials and approaches for generating and repairing defects, including synthesis and post-growth treatments, are systematically introduced. The correlations between defects and optical, electronic, and magnetic properties of 2D materials are then highlighted. Subsequently, defect engineering for high performance electronics and optoelectronics is emphasized. At last, we provide our perspective on challenges and opportunities in defect engineering of 2D materials.