AbstractParity‐time (PT) symmetric systems with gain‐loss balanced structures can have entirely real eigenenergy spectra despite their non‐Hermitian nature, leading to peculiar discoveries such as single‐mode lasers, wireless power transfer, and non‐reciprocal light propagation. Recently, the study of PT‐symmetry has extended to the quantum realm, inspiring a search for PT‐symmetric quantum effects as well as their unique applications. Here, quantum entanglement and sensing with a PT‐symmetric system of two qubits are studied with Ising‐type interaction. It is shown that exceptional points (EPs) can induce exceptional entanglement phenomena such as collapse‐revival and steady‐state entanglement on the two sides of EPs. The entanglement in the PT‐symmetric system is also found to be generated more quickly than that in the Hermitian counterpart. In addition, a scheme for realizing EP‐enhanced quantum sensing is proposed by calculating the quantum Fisher information to estimate the parameters of the system. The work provides new insights into EP‐engineered quantum effects and can benefit a wide range of applications based on non‐Hermitian quantum devices.