Recent theoretical studies suggest none or minor changes in the band gap of two-dimensional (2D) α-MoO3 nanosheets as compared with that of the bulk because of the weak interlayer electronic interactions. Unfortunately, this suggestion is lacking positive support in the literature. Herein, we report experimental observations of huge blue shifts in the absorption edge of layered α-MoO3 as its thickness t is reduced approaching atomic layers. When t > 10 nm, every order of magnitude of thickness reduction gives rise to a blue shift of ∼0.29 eV without causing any Raman mode shifts. This blue shift, in terms of finite difference time domain calculations, is attributable to optical interferences at the crystal surfaces. However, when t is further reduced below ∼10 nm, an even larger blue shift, accompanied by a mode softening of the most strengthened Mo–O–Mo stretching phonon (Ag), has been observed. This observation is consistent with those of 2D α-MoO3 nanosheets produced by aqueous exfoliations and, based on our calculations of the electronic structures, can be explained as anisotropic in-plane strain relaxations/redistributions. A gas-phase layer-by-layer etching of the layered α-MoO3 single crystals has also been demonstrated for consequent fabrications of novel electronic devices, as well as their integrations, based on α-MoO3 and other 2D nanosheets.