The Peierls distortion plays an essential role in governing the in‐plane ferroelectricity and nonlinear optical characteristics of anisotropic niobium oxide dihalides, such as NbOCl2 and NbOI2. Despite its significance, experimental investigation into the structural, optical, and ferroelectric properties of NbOBr2 has been lacking. Here, the successful fabrication of centimeter‐sized, high‐quality NbOBr2 single crystals, enabling direct observation of Peierls distortion using aberration‐corrected scanning transmission electron microscopy, is reported. Notably, the magnitude of Peierls distortion in NbOBr2 falls between that observed in NbOCl2 and NbOI2. Furthermore, the existence of giant linear dichroism absorption and second‐harmonic generation (SHG) phenomena associated with Peierls distortion is confirmed. Exfoliated NbOBr2 flakes exhibit single‐domain ferroelectricity, with the polarization switchable by an electric field. Temperature‐dependent SHG measurements reveal a Curie temperature of ≈502 K for ferroelectric NbOBr2. This work demonstrates that NbOBr2 holds promise for polarized nonlinear optical devices, as well as for nonvolatile information processing and storage devices.