MXene (e.g., Ti₃C₂) represents an important class of two-dimensional (2D) materials owing to its unique metallic conductivity and tunable surface chemistry. However, the mainstream synthetic methods rely on the chemical etching of MAX powders (e.g., Ti₃AlC₂) using hazardous HF or alike, leading to MXene sheets with fluorine termination and poor ambient stability in colloidal dispersions. Here, we demonstrate a fluoride-free, iodine (I₂) assisted etching route for preparing 2D MXene (Ti₃C₂T_x, T=O, OH) with oxygen-rich terminal groups and intact lattice structure. More than 71 % of sheets are thinner than 5 nm with an average size of 1.8 μm. They present excellent thin-film conductivity of 1250 S cm⁻¹ and great ambient stability in water for at least 2 weeks. 2D MXene sheets with abundant oxygen surface groups are excellent electrode materials for supercapacitors, delivering a high gravimetric capacitance of 293 F g⁻¹ at a scan rate of 1 mV s⁻¹, superior to those made from fluoride-based etchants (<290 F g⁻¹ at 1 mV s⁻¹). Our strategy provides a promising pathway for the facile and sustainable production of highly stable MXene materials.