The authors perform first‐principles calculation on the electronic, magnetic, and optical properties of transition‐metal (TM) atom (Cr, Mn, Fe, Co, or Ni) doped CdS nanosheets (CdSNSs). The results indicate that the pristine CdSNSs are nonmagnetic and exhibit a direct semiconductor feature with the bandgap of ≈1.80 eV. However, TM atom doping results in spin‐polarized states with the preservation of its direct band gap character. The authors find that Cr, Co, or Ni doped nanosheets are half‐metallic. In contrast, Mn and Fe doped nanosheets are still semiconductors. The authors also find that the magnetism of TM‐doped CdS NSs is mainly attributed to the TM atom with a strong localized magnetic moment. Moreover, the red‐shift phenomenon is found in the region below 1.5 eV, which makes TM atom doped CdSNSs a good platform for realizing optical properties in the visible region.