Two-dimensional (2D) materials have captured the imagination of the scientific community for their remarkable properties and potential applications. To further harness the full spectrum of their capabilities, researchers have turned to phase engineering as a powerful tool. Phase engineering involves controlling and manipulating the structural and electronic phases of 2D materials, leading to a wide array of novel and tunable properties. In this comprehensive review, we investigate the exciting world of phase engineering in 2D materials. We start by providing detailed background on the emergence of 2D materials, highlighting their exceptional electronic, mechanical, and optical properties. We then explore the concept of phase engineering, elucidating its principles and significance in tailoring the behavior of 2D materials. Advanced field applications of 2D materials, such as sensing, water desalination, energy storage, and detection were also considered in this review article.