In this study, the exfoliation of bulk hafnium diselenide (HfSe2) into a few layers of HfSe2 was obtained via a simple liquid-phase exfoliation (LPE) technique in water with the absence of any chemicals or surfactants. The performance of HfSe2 as a saturable absorber (SA) was investigated to generate a mode-locked thulium-doped fiber laser (TDFL). The HfSe2 solution was drop-casted onto the surface of the fabricated D-shaped fiber to allow the occurrence of evanescent field interaction, hence inducing the mode-locked laser pulses at the 2.0 μm wavelength region. As a result, the prepared HfSe2-D-shaped based SA exhibits nonlinear optical absorption characteristics with modulation depth, saturation intensity, and non-saturable absorption of 16.36%, 9.92 kW/cm2, and 72.57%, respectively. The designed TDFL cavity generated soliton pulses centered at 1963.44 nm with 2.88 nm spectral bandwidth at the threshold pump power of 191.80 mW. The self-starting mode-locking produced a regular train of pulses at the repetition rates of 8.91 MHz with pulse duration of 1.53 ps and a signal-to-noise ratio (SNR) value of 65 dB. Maximum average output power, single pulse energy, and peak energy of 2.25 mW, 252.53 pJ, and 0.17 kW were obtained when the pump power was raised to 461.23 mW. These results experimentally verify the feasibility of using the prepared HfSe2-D-shaped based SA device as an optical modulator for photonics applications such as ultrafast laser generation.