The remarkable properties of graphene have renewed interest in inorganic, two-dimensional materials with unique electronic and optical attributes. Transition metal dichalcogenides (TMDCs) are layered materials with strong in-plane bonding and weak out-of-plane interactions enabling exfoliation into two-dimensional layers of single unit cell thickness. Although TMDCs have been studied for decades, recent advances in nanoscale materials characterization and device fabrication have opened up new opportunities for two-dimensional layers of thin TMDCs in nanoelectronics and optoelectronics. TMDCs such as MoS2, MoSe2, WS2 and WSe2 have sizable bandgaps that change from indirect to direct in single layers, allowing applications such as transistors, photodetectors and electroluminescent devices. We review the historical development of TMDCs, methods for preparing atomically thin layers, their electronic and optical properties, and prospects for future advances in electronics and optoelectronics.