Layered transition metal dichalcogenides (TMDs) represent a diverse, emerging source of two-dimensional (2D) nanostructures with broad application in optoelectronics and energy. Chemical functionalization has evolved into a powerful tool to tailor properties of these 2D TMDs; however, functionalization strategies have been largely limited to the metallic 1T-polytype. The work herein illustrates that 2H-semiconducting liquid-exfoliated tungsten disulfide (WS2) undergoes a spontaneous redox reaction with gold (III) chloride (AuCl3). Au nanoparticles (NPs) predominantly nucleate at nanosheet edges with tuneable NP size and density. AuCl3 is preferentially reduced on multi-layer WS2 and resulting large Au aggregates are easily separated from the colloidal dispersion by simple centrifugation. This process may be exploited to enrich the dispersions in laterally large, monolayer nanosheets. It is proposed that thiol groups at edges and defects sides reduce the AuCl3 to Au0 and are in turn oxidized to disulfides. Optical emission, i.e. photoluminescence, of the monolayers remained pristine, while the electrocatalytic activity towards the hydrogen evolution reaction is significantly improved. Taken together, these improvements in functionalization, fabrication, and catalytic activity represent an important advance in the study of these emerging 2D nanostructures.