The properties and performance of 2D nanostructures are known to be critically affected by localized edge states. Here, platinum diselenide (PtSe₂) films, synthesized by thermally assisted conversion, are characterized by a variety of spectroscopic and microscopic methods, including scanning tunneling microscopy and spectroscopy, and scanning transmission electron microscopy. We report the presence of distinct edge states, and use surface Green’s function methodology in atomistic modeling of different edge atomic structures, together with other theoretical tools, to investigate their origin. Our results indicate that the edges, inherent and abundant in polycrystalline films, can be semiconducting or semimetallic in nature depending on the edge configuration. Experimental results in conjunction with first-principles calculations demonstrate a mapped band profile of the atomically-sharp step edges of PtSe₂, which form lateral heterojunctions possessing large asymmetric band offsets in the conduction and valence bands. We further explore the viability of a single step monomaterial heterojunction based field-effect transistor, through atomistic quantum transport simulations. This reveals the critical role of the edge states in creating a wider energy band for carrier transport in the ON-state and hence enabling a remarkably large I_ON/I_OFF ratio > 10¹⁰ and near-ideal subthreshold slope, fulfilling the requirements for low-power applications.