Two-dimensional transition metal dichalcogenides (2D TMDs) have gained considerable attention due to their distinctive properties and broad range of possible applications. One of the most widely studied transition metal dichalcogenides is molybdenum disulfide (MoS2). The 2D MoS2 nanosheets have unique and complementary properties to those of graphene, rendering them ideal electrode materials that could potentially lead to significant benefits in many electrochemical applications. These properties include tunable bandgaps, large surface areas, relatively high electron mobilities, and good optical and catalytic characteristics. Although the use of 2D MoS2 nanosheets offers several advantages and excellent properties, surface functionalization of 2D MoS2 is a potential route for further enhancing their properties and adding extra functionalities to the surface of the fabricated sensor. The functionalization of the material with various metal and metal oxide nanostructures has a significant impact on its overall electrochemical performance, improving various sensing parameters, such as selectivity, sensitivity, and stability. In this review, different methods of preparing 2D-layered MoS2 nanomaterials, followed by different surface functionalization methods of these nanomaterials, are explored and discussed. Finally, the structure–properties relationship and electrochemical sensor applications over the last ten years are discussed. Emphasis is placed on the performance of 2D MoS2 with respect to the performance of electrochemical sensors, thereby giving new insights into this unique material and providing a foundation for researchers of different disciplines who are interested in advancing the development of MoS2-based sensors.