Two-dimensional transition metal dichalcogenides (TMDs) offer fascinating opportunities for fundamental nanoscale science and various technological applications. They are a promising platform for next generation optoelectronics and energy harvesting devices due to their exceptional characteristics at the nanoscale, such as tunable bandgap and strong light-matter interactions. The performance of TMD-based devices is mainly governed by the structure, composition, size, defects, and the state of their interfaces. Many properties of TMDs are influenced by the method of synthesis so numerous studies have focused on processing high-quality TMDs with controlled physicochemical properties. Plasma-based methods are cost-effective, well controllable, and scalable techniques that have recently attracted researchers’ interest in the synthesis and modification of 2D TMDs. TMDs’ reactivity toward plasma offers numerous opportunities to modify the surface of TMDs, including functionalization, defect engineering, doping, oxidation, phase engineering, etching, healing, morphological changes, and altering the surface energy. Here we comprehensively review all roles of plasma in the realm of TMDs. The fundamental science behind plasma processing and modification of TMDs and their applications in different fields are presented and discussed. Future perspectives and challenges are highlighted to demonstrate the prominence of TMDs and the importance of surface engineering in next-generation optoelectronic applications.