Recently, the successful synthesis of the pentagonal form of the PdTe2 monolayer (p−PdTe2) was reported [Liu et al., Nat. Mater. 23, 1339 (2024)]. In this paper, we present an extensive first-principles density-functional theory based computational study of vacancies in this material. Our paper covers the evolution of the electronic, optical, and magnetic properties of various defect configurations and compares those to the pristine monolayer (p−PdTe2). We find that VPd (VTe) is the most stable defect in the p−PdTe2 monolayer with 0.95 (1.60) eV of formation energy in the Te-rich (Pd-rich) limit. The defects alter the electronic properties of the monolayer significantly, leading to changes in their magnetic and optical properties due to the emergence of midgap impurity states. The defect complex VPd+4Te is found to induce spin polarization in the system with a total magnetic moment of 1.87 µB. The obtained low diffusion energy barrier of 1.13 eV (in-plane) and 0.063 eV (top-bottom) corresponding to VTe indicates its facile migration probability is higher in the top-bottom direction in comparison to the in-plane direction at room temperature, as revealed by ab initio molecular dynamics simulations as well. In order to guide the experimentalists, we also simulated the scanning tunneling microscope images corresponding to all the defect configurations. Moreover, we also computed the electron-beam energies required for creating monovacancies. In the optical absorption spectra of the defective configurations, finite peaks appear below the band edge that are unique to the respective defective configuration. We have also computed the excess polarizability of the defective configurations with respect to the pristine one and found that maximum changes occur in the infrared and visible regions, providing insights into the change in their optical response as compared to the pristine monolayer. Our paper will open prospects of defect engineering in this and related materials with the aim of tuning their electronic, optical, and magnetic properties from the point of view of device applications. locked icon locked icon locked icon locked icon locked icon locked icon locked icon locked icon locked icon locked icon locked icon locked icon locked icon locked icon locked icon locked icon locked icon locked icon locked icon Physics Subject Headings (PhySH)DefectsDensity of statesElectronic structureFirst-principles calculationsMagnetismStructural properties2-dimensional systemsTransition metal dichalcogenidesDensity functional theory