Here, we studied the physical properties of atomic oxygen-doped two-dimensional (2D) MgF2 monolayer using density functional theory. The undoped MgF2 exhibits an insulating behavior. However, it shows a small amount of incident light absorption in the visible region when an F-atom is substitutional doped with an oxygen (O) atom. Further, the increasing oxygen concentration shows an enhanced optical absorption of light in the visible spectrum. Hence, it can be used as an absorption band pass/stop filter. The absorption spectrum is consistent with the calculated extinction coefficient. The increased absorption shows the improved conductivity of doped MgF2. Moreover, the dielectric constant and refractive index increase with increasing O-doping concentration. Its refractive index enhances more than that of silicon (3.9). The increased O-doping also enhances the reflection of light in the microwave to the infrared region, which is justified by the transmission spectrum. The energy losses also increase with increasing O-concentration. These losses show the existence of plasma resonances. The dielectric and optical responses show that it behaves like a high-k dielectric material for large O-doping concentrations. The discussion above indicates that the O-doped 2D MgF2 monolayer is an excellent electronic and dielectric material for electronic, optical, and optoelectronic applications.