Abstract Heterostructures composed of transition metal dichalcogenides (TMDs) and transition metal oxides (TMOs) are essential for a wide range of applications, including photocatalysis and optoelectronic devices. The interface between these materials plays a significant role in controlling bandgap, charge carrier dynamics and photocatalytic activity. Therefore, it is imperative to conduct a systematic study of interface formation and its impact on these parameters to enhance the efficiency of both photocatalysts and devices. In this work, the synthesis of layered MoO 3 –MoS 2 heterostructure using the two‐step chemical vapor deposition method is reported. The α‐MoO 3 is synthesized using vapor trapping technique, followed by sulfurization to form the heterostructure. The interfacial structures and evolution of MoO 3 to MoS 2 at the interface using XRD, Raman, HRTEM, and XPS are systematically investigated. Density functional theory based on the first‐principle calculations shows that an additional layer, MoOS, within the MoO 3 –MoS 2 heterostructure induces a type‐II band alignment rather than a type‐III alignment. Further, the heterostructure is utilized as a photocatalyst, which shows threefold increase in photocatalytic efficiency compared to pure MoO 3, achieving the degradation of 5 ppm MB dye in just 20 min under visible light, with a rate constant of 0.11408 min⁻¹, following a type‐II staggered heterojunction mechanism.