The family of two-dimensional (2D) layered materials with strong excitonic effect offers fascinating opportunities for studying excited state exciton behavior at 2D limit. While exciton dynamics in conventional 2D semiconductors (e.g. transition metal dichalcogenides) has been extensively studied, little is known about exciton properties and dynamics in 2D layered semiconductors with strong electron/exciton-phonon coupling. Here, by combining experimental and theoretical approaches, we reveal the intrinsic highly localized exciton (i.e. self-trapped exciton) in 2D layered As2S3, driven by strong exciton-phonon interaction. It is shown that photoexcited electron/hole charges in As2S3 localize spontaneously in ~110 fs, giving rise to large stokes-shifted and broad photoluminescence. An interlayer partial bond is formed between chalcogen atoms, triggering lattice distortion and carrier localization. Together with Urbach-Martienssen analysis, this study provides a comprehensive physical picture to understand the complex interplay between exciton and lattice dynamics in 2D semiconductors, which has strong implications to their optoelectronic properties and applications.