The design of nanostructures with unique morphologies and enhanced functionalities is a cornerstone of modern materials science. Ion exchange reactions in inorganic crystals offer a versatile approach for precisely controlling the composition, morphology, and properties of the materials through stepwise transformations. In this study, we report the anion-exchangemediated conversion of 2D layered material SnS 2 into SnSe 2 , with SnS 2 −SnSe 2 lateral heterostructures as intermediates. This transformation, driven by the disparate diffusion rates of S 2− and Se 2− ions, leads to the generation of hexagonal nanorings of SnSe 2 (inaccessible by direct synthetic routes) via the Kirkendall effect. By carefully balancing the diffusion kinetics through concentration control, we successfully synthesized continuous SnSe 2 nanosheets. To elucidate the anion-exchange mechanism, we conducted a comprehensive investigation using electron microscopy techniques, varying parameters such as time, precursor concentration, and reagents. Our findings revealed that the exchange process initiates at the edges of the template SnS 2 nanosheets and progresses inward. Cross-sectional atomic-resolution electron microscopy of the interfaces and layer stacking in the SnS 2 −SnSe 2 heterostructure uncovered numerous defects attributed to ion migration and lattice mismatch, which were not detectable in planar views. Furthermore, as-synthesized materials are explored for gas-sensing applications. Our anion-exchange-derived SnS 2 −SnSe 2 heterostructure and SnSe 2 exhibited exceptional selectivity and sensitivity toward NO 2 gas (response >700%) at room temperature comparable to state-of-art sensors, significantly outperforming the pristine SnS 2 material, which required elevated temperatures (150 °C) for optimal response. This study underscores the potential of anion exchange as a powerful tool for designing novel nanomaterials with tailored properties and applications, particularly in the realm of gas sensing.