Defect engineering represents a paradigm shift in tailoring nanomaterials for enhanced catalytic performance across various applications. This manuscript succinctly highlights the significance of defect engineering in improving the catalytic performance of BiOI nanoparticles for multiple applications, particularly in photocatalysis. The photocatalytic process of BiOI semiconductor is intricately linked to its indirect bandgap and layered crystalline structure. By influencing the structural dynamics of its layered materials, defects contribute significantly to optimizing its catalytic performance. "Fundamental insights into manipulating defects, including oxygen and iodine vacancies, bismuth defects, and synergistic dual defects, in BiOI are meticulously discussed. Advanced characterization techniques, spanning spectroscopy to microscopy, are explored for precise defect identification and quantification. The fragile van der Waals forces foster interactions between adjacent iodine atoms in BiOI, contributing to the overall structural stability". Understanding these structural intricacies lays a robust foundation for comprehending and exploring the exceptional physicochemical properties of two-dimensional BiOI. The manuscript showcases BiOI potential in energy and environmental sectors, ranging from solar-driven H